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2016 – The Year of the Sugar Tax?

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Published on December 15, 2016

After the surprise announcement in March by former Chancellor, George Osborne, that a sugar levy would be introduced in the UK in 2018, interventions like sugar taxes aiming to steer people away from sugar sweetened beverages (SSB) towards healthier options have gathered momentum in countries around the world. France, Hungary, Ireland, Mexico, Norway, Portugal, and South Africa have all proposed or introduced a sugar tax of some description. In addition to encouraging behaviour change in consumers, the sugar levy is catalysing industry to reformulate their products.

Most recently, five locations, including San Francisco, Oakland, and Albany in California, USA voted in favour of introducing sugar taxes. In a time of economic uncertainty, these taxes are expected to generate $15 million and $6 million in San Francisco and Oakland respectively. Michael Jacobson, co-founder and president of the Center for Science in the Public Interest believes legislators should view sugar taxes as ‘a twofer’, balancing the budget and also improving public health.

Pro tax campaigners have suggested that the introduction of sugar taxes in California could “start a national movement”, with their recent victories coming in spite of the soda industry spending almost $38 million in an anti tax campaign. Their cause for optimism may be well founded. In October, the World Health Organisation took the significant step of publically promoting taxes on sugary drinks as an effective way of curbing obesity. The WHO’s suggestion that countries should introduce a tax that adds 20% or more to the price of SSBs has added weight to the growing pressure campaigners are exerting on governments around the world.

There is also a growing body of research documenting the positive impacts of taxes that have been introduced. The British Medical Journal published a study in January stating that a 10% tax on SSBs in Mexico has been associated with an overall 12% reduction in sales and a 4% increase in purchases of untaxed beverages. According to the University of California, two low-income neighbourhoods in Berkeley are drinking 21% less SSBs after the soda tax was introduced.

Research conducted in association with the soda industry questions these findings and suggests the tax has had minimal impact: the American Beverage Association reacted to these findings by criticising the “unreliable and imprecise methodology” used to produce a set of “implausible results”. However, research carried out in association with the soda industry has gained little traction to date.

One could argue that the impacts of the introduction of the sugar levy in the UK can already be seen, with some manufacturers pledging to reformulate their products. The manufacturers of Lucozade and Ribena have recently announced their plans to reduce the amount of sugar in their drinks so it falls below the 5g per 100ml limit, thus avoiding the tax. Tesco has also made a commitment to reduce sugar to a similar level across all of their 251 soft drink products.

Whilst evidence continues to emerge from both camps on the efficacy of sugar taxes, time will tell as to whether they have a significant impact on the consumption of sugar. However, with influential organisations, such as the WHO, throwing their support behind the intervention, and governments and local authorities increasingly viewing sugar taxes as a potential funding mechanism for social purpose project, one can expect more countries and cities to seriously consider this approach.

It should be remembered that a sugar tax is not a silver bullet to tackle the complex challenge of obesity, but as things stand, if 2016 has not been the year of the sugar tax, it looks increasingly likely that 2017 will be.

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