Dia Chakravarty is Political Director of the Taxpayers’ Alliance.
“When it comes to a Sugar Tax, the answer is no,” said the Prime Minister’s spokesman only last year. Less than a year later, we are staring at the latest diktat from the high priests of the Nanny State, a shiny new Sugar Tax.
Sugar Tax is a deeply regressive consumption tax, which will hit those on lower incomes the hardest. The poorest households in the country already pay a disproportionate amount of their gross income in consumption taxes. More than 20 per cent of the gross incomes of the poorest 10 per cent of households is spent on alcohol, tobacco and fuel duties and VAT, compared to less than 10 per cent for the median household. Politicians of all persuasions are forever lamenting the terrible cost of living plaguing the hard-pressed families of these Isles. Yet, shamefully, this ludicrous tax which will directly impact on household bills was welcomed by the Opposition just as enthusiastically as it was introduced by this increasingly authoritarian Government. It seems when it comes to kowtowing to the high priests our political parties stand united.
What makes the policy even worse is that all evidence suggests a Sugar Tax would be completely ineffective. It may well stop people from buying sugary drinks but there are a huge number of substitutes such as sweetened juices, chocolate drinks and other confectionary which are just as unhealthy, if not worse. The health campaigners are fond of citing the example of Mexico as a successful case study where a tax on sugary drinks was recently introduced. The consumption of sugary drinks did go down, but the number of calories consumed by the average Mexican fell by just five a day – which represented “nothing compared to the drop in calories people needed to consume in order to not be obese”.
In that same article, Professor Emilio Gutiérrez, of Mexico’s ITAM University, said: “I think the tax has been useless, honestly…it may have reduced soda consumption a bit but not sufficient to lead to a long-term reduction in obesity”. The results from the US are even worse. A study from Cornell University found that after a six month experiment in an American city, a 10 per cent tax on calorie-dense food and beverages led to increased purchases of beer. And this example demonstrates an important difference between sugar and tobacco. Alternatives to tobacco, such as e-cigarettes and nicotine patches, are actually healthier than tobacco. That is not necessarily the case for the closest alternatives to sugary drinks.
Another example which demonstrates the inefficacy of a similar policy in affecting people’s behaviour while putting a huge burden on the economy is that of the Danish fat tax. It was introduced in 2011, but dropped after just 15 months) when the detrimental effect and the fact that it had had little or no impact on Danish fat consumption became obvious. While an estimated Kroner 200 million was spent on administrative costs (all of which likely to have been passed on to consumers), a survey found that 80 per cent of Danes did not change their shopping habits at all. By October 2012, 70 per cent of Danes considered the tax to be “bad” or “very bad” and the Minister for Food, Agricultural and Fisheries admitted that “the fat tax is one of the most criticised policies we have had in a long time”.
Even the advocates of Sugar Tax know this is just a spiteful levy which will do very little to change people’s behaviour, it’ll merely teach consumers of sugar a bit of a lesson as they pay an inflated price for everyday goods. The most prominent cheerleader of Sugar Tax, Jamie Oliver, called it “a symbolic slap” in his interview to the BBC yesterday. What is merely a symbolic slap to the celebrity chef will place a very real burden on the household bills of already struggling families.
One wouldn’t think it from the gloom and doom peddlers, but the Health and Social Care Information Centre found that the percentage of children classified as overweight or obese was actually lower in 2014 than when it peaked a decade ago. Only in January, Jeremy Hunt himself cited this as a reason to oppose a Sugar Tax. The Health Department Agency found that information campaigns have been successful in promoting awareness while a Public Health England report concluded that price increases on high sugar products are less effective than non-fiscal measures to reduce sugar consumption.
The Government has declared that the estimated revenue raised from the Tax – £520 million – will apparently fund sport in primary schools. The Sugar Tax will either prevent people from buying sugary drinks, encouraging a healthier lifestyle, or it’ll raise the £520 million. It cannot possibly do both and the Chancellor knows this. He just handed us the bitter pill of a plain and simple flat tax which will earn the Treasury some much-needed funds at the expense of hard-pressed families, using the entirely disingenuous pretext of health benefits to – ironically – sweeten the deal.