Harry Fairhead is a Policy Analyst at the TaxPayers’ Alliance.
With all respect to Steve Double’s recent article in favour of a tax on sugar-sweetened drinks, the evidence and rationale for such a policy is not clear cut.
True, some 31 per cent of children are considered overweight or obese. But this is lower than it was when the level peaked over a decade ago and we certainly are not seeing the sharp rises that were typical of the late 1990s and early 2000s.
Average UK sugar consumption is in fact now significantly lower than it was in the 1970s. So what has changed that leads some now to say state intervention is required when they were happy to let slide in 2005?
Double discusses the “obesogenic environment” (a phrase used often in this WHO report) which challenges parents to keep their children healthy because they are exposed to advertising that encourages a poor diet.
This may be true, but parents still control what their children eat so they must take responsibility for their diets and health: they cannot abdicate all decisions to the government.
Besides, advertising is not generally aimed at increasing total consumption of a certain type of product; rather, it tries to get consumers to switch from one brand to another – from Coke to Pepsi for example.
Aside from these points, the most important question is whether a sugar tax would work – and international evidence suggests that it would not.
Mexico introduced a tax on sugar-sweetened drinks in 2013, and initial studies have suggested that there had been a fall in consumption.
However the fall was (according to the FT) “nothing compared to the drop in calories people needed to consume in order not to be obese”. And just a few days ago Bloomberg reported that sales of fizzy drinks were had rebounded, despite the tax.
Similarly, Denmark imposed a fat tax in 2011 but when it failed to change shopping habits, made prices rise and cost 200 million Kroner to administer, it was quietly dropped. The Danish Minister for Food, Agriculture and Fisheries admitted that “the fat tax is one of the most criticised policies we have had in a long time”.
For sugar tax campaigners this creates two problems.
Firstly, it seems that where people did change their behaviour they just switched to other, equally calorific, food and drink.
This is contrary to the claims of pro sugar tax campaigners who try to insist that falling tobacco sales show the effectiveness of taxation to change behaviour. Unlike tobacco, there are many other options for people wanting sugary drinks.
These allow people to avoid paying the tax but to continue consuming the same amount of calories. Indeed the results can be very perverse: one US study showed that a tax on calorie-dense food and drinks led to increased beer purchases.
Secondly, the evidence suggests that people in Mexico and Denmark continued to buy the same food and drink and accepted that it was a little more expensive.
In either scenario the aims of a sugar tax go unfulfilled.
The best reason to reject a sugar tax would be if the latter scenario occurs. If sales don’t take the expectant hit, who would pay for it? A sugar tax would be very regressive for families with low incomes.
Double is very clear that he is a “passionate believer in keeping taxes as low as possible” but a distributional analysis shows that taxes with slab rates (such as VAT, fuel duty and the ‘sin taxes’) disproportionately fall on those at the bottom end of the income distribution.
Those on the lowest incomes already pay 45 per cent of their gross income (income plus cash benefits) to the taxman. A sugar tax would only increase this and it seems morally wrong to take yet more money out of the pockets of the poorest.
And since we already pay VAT on sugary drinks, would it in any case be fair to tax people twice for the same product (three times if VAT is levied on the sugar tax, as it is for fuel duty)?
Restricting advertising, telling manufacturers what to put in their food and trying to standardise the size of a portion of food may seem attractive in comparison but perhaps it would be better simply to encourage some personal responsibility – particularly as any additional regulations which lead to higher costs for manufacturers and retailers will most likely be passed on to consumers through higher prices.
The current education campaigns are expensive but the recent small fall in children classified obese and overweight suggests that they are working. It would be prudent to allow them to bed in before imposing other nanny-state measures. And certainly it would be better than raising the cost of living with a sugar tax.