The Sun reports that the UK sugar tax, set to enter into force in April 2018, is facing rising opposition which questions both its merits and its design.
Taxpayers Alliance is criticizing the Government for the introduction of a regressive tax that will raise the cost of living for those less well-off families that endure a daily struggle against tax bills. Drawing from the Mexican precedent the citizens’ association calls out the ineffectiveness of such a measure: in 2014 Mexico introduced a tax on fizzy drinks which led to a reduction in daily consumption of some mere 5 calories, as much as five percent of a slice of wholemeal bread.
Taxpayers Alliance chief Jonathan Isaby said: “It is astonishing that the government is pressing ahead with this pernicious tax when the evidence clearly suggests that it will simply not affect consumption in any meaningful way.”
The Alliance accuses UK’s Councellor George Osborne of pursuing Nanny State policies and demands for the initiative to be revoked.
Lawyers consulted on the matter argue that the tax might be blocked by European courts on discriminatory grounds – given the high sugar drinks such as milk-based and coffee-based beverages are exempt from the duty.
You may find the full article by Steve Hawkes on The Sun website.
The Finnish government has scrapped a plan to replace the current tax on sweets with a tax on sugar, stressing that such measure would be difficult to implement and its health impact is not clear.
The idea for a sugar tax was tabled by the National Institute for Health and Wellness (THL) – a research and development institute under the Finnish Ministry of Social Affairs and Health – to replace the existing excise duty on sweets, which has been abolished with effect as of January 2017 after the European Commission suggested it could constitute unlawful state aid.
The consequent loss of revenues has forced some government officials to look for other fiscal measures, making clear that the main reason behind a sugar tax would be economical.
However, the Ministry of Finance itself has ruled out this option. Through Merja Sandell, it stressed that a sugar tax “would be a bureaucratic burden” and difficult to put in place. Another senior official said it will not lead to the desired health effects.
The full article is available (in Swedish) here.
A new report based on real-world examples by the prestigious UK-based think tank Institute for Economic Affairs demonstrates that sugar taxes are ineffective, regressive and inefficient.
The main findings confirm what many other studies have already shown, in particular:
- The demand for sugary drinks, snacks and fatty foods is inelastic: evidence demonstrates that most people will not change their food shopping habits unless prices change dramatically
- Consumers respond by substituting taxed food and drinks with cheaper brands of the same products or with similar non-taxed products. This behaviour leads to the consumption of potentially inferior goods rather than the consumption of fewer calories
- Consumers tend to switch from taxed sugary drinks to other high calorie drinks such as fruit juice, milk or alcohol
- Food taxes are highly regressive and severely hit low income households because energy-dense food and soft drinks take a greater share of their earnings than that of higher income households
- Most notably, no impact on health has ever been found
Asked to comment on the report, Chris Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs, said that the effectiveness of sugar taxes as health measures lack “any real world evidence”.
“It’s high time this policy [taxing sugar] is put to bed” – he concluded.
In an interview available on the website of the Bulgarian Ministry of Finance, the Minister Vladislav Goranov, asked to comment on the matter, has voiced his opposition to the much debated proposal of a ‘food tax’.
The Finance Minister questioned whether it is appropriate to change consumers’ behaviour through the introduction of new taxes, adding that this very goal would fail. Moreover, he expressed his concern that such a measure could result in the smuggling of similar goods not subject to taxation from neighbouring countries.
In conclusion, Minister Goranov stated that most likely this type of tax will not be introduced.
In this article, from the health section of the Spectator magazine website, the author explains how, one and a half year after its abolishment, pro fat tax voices are trying to rewrite history, claiming the Danish tax was more effective than previously thought.
In articles that appeared in the European Journal of Clinical Nutrition and the British Medical Journal, the authors provide numbers proving that sales of fatty products fell by 10 to 15 per cent figure as a result of the tax.
“This figure comes from a study that looked at sales of butter, margarine and cooking oils in the first three months of the tax’s existence. The study did indeed show a fall of 10 to 15 per cent in those early days but there is a simple explanation for this. Knowing that the tax was to be introduced on 1 October 2011, thrifty Danes stockpiled fatty products in advance”.
On long term dietary changes, the author points out that “the reality is the tax had little or no effect on dietary habits, obesity and health. It failed to do what it was supposed to do and so the Danes sensibly got rid of it”. On the contrary, its negative effects on the economy were real: looking back, “the tax on saturated fat led to inflation, cross-border shopping, job losses and huge administrative costs”, he adds.
The Spectator article refutes more pro tax claims about the Danish fat tax and can be read in full here.
A new paper, published by the UK think tank Institute of Economic Affairs, scrutinises the justification for increasing government interference in the sugar market, as has been recently proposed by the British Medical Association with its call for a 20 per cent sugar tax.
While the paper, Sweet Truth – Is there a market failure in sugar?, discusses a broader range of possible policies to reduce sugar consumption, it is mainly the conclusion on food taxes that catches the eye:
“Taxes on food and soft drinks have been shown to be ineffective in reducing obesity due to inelastic demand and substitution effects. The cost to the taxpayer far exceeds any savings that might be made and the highest burden would fall on low income consumers. Moreover, it is extremely doubtful whether obesity, however caused, places an additional burden on public finances. Pigouvian taxes on sugar, soda or fat cannot therefore be justified on economic grounds. Such taxes are typically introduced as revenue-raising measures and should be seen as stealth taxes, not health taxes”.
Some of the other interesting findings of the paper include the fact that Britons today consume less sugar per head than they did in 1900, while patterns of obesity and diabetes have not followed patterns of sugar consumption at the population level.
Furthermore, the authors conclude that there is insufficient scientific evidence to label any common ingredient, including sugar, as addictive. Similarly, there is insufficient evidence to suggest that a calorie from sugar is more fattening than a calorie from other foods.
Finally, the paper also makes a case against ‘traffic light’ labelling, mandatory reformulation and a ban on advertising for foodstuffs that are high in fat, salt or sugar.
The full paper, Sweet Truth – Is there a market failure in sugar?, can be found here.