Sugary drink taxes – the new normal

20 June 2018 | Policy

Lynn Silver, a paediatrician and public health advocate, is Senior Advisor at the Public Health Institute and Clinical Professor at the University of California, San Francisco. Her work has advanced and evaluated policies to prevent chronic disease at home and globally, including innovative approaches to salt, sugar and trans-fat reduction.

A few years ago, I had the pleasure of hearing the former President of Finland describe the spread of new ideas in health policy as moving across a trajectory of public perception. That trajectory started at 'ridiculous', advanced with trepidation to 'possible' and then finally landed on 'normal'. At the time she was referring to smoke-free air, although perhaps perceptions of women as presidents could just as easily have been the theme. Today, the once radical idea of levying heavy taxes on deeply harmful sugary drinks has moved solidly into the “possible” realm and is well on its way to attaining “normal” status.

Since 2013, taxes on sugary drinks have passed in Mexico, eight US jurisdictions, Chile, Ecuador, Brunei, Barbados, St Helena, Kiribati, Dominica, Belgium, Vanuatu, the UK, Portugal, Mauritius, St Vincent and the Grenadines, India, South Africa, the region of Catalonia in Spain, Saudi Arabia, the United Arab Emirates, the Philippines, Thailand, Sri Lanka and, most recently, Ireland and Peru in May 2018. With India’s recent 40 per cent tax on carbonated beverages, they now cover more than 1 billion people.

These new taxes range from less than ten per cent to as high as 100 per cent on energy drinks in Saudi Arabia. Some are ad valorem, some in pennies per litre, and yet others are tiered to the sugar content, as in the recent UK and Thailand taxes, to encourage reformulation. Most cover only sugar-sweetened drinks. Others include those using non-caloric sweeteners (Philadelphia) or any carbonated beverages. Over just a few years, the taxes have increased in size to reach or surpass the World Health Organization (WHO) recommended minimum of 20 per cent. Some measures dedicate the resources to promoting health; in many others, funds go to the treasury.

World Cancer Research Fund (WCRF) International’s new report, Building Momentum: lessons on implementing a robust sugar-sweetened beverage tax, outlines lessons learned from countries around the world that have implemented (or attempted to implement) a sugary drinks tax.

The evidence

Early research from Mexico, Berkeley and Philadelphia has predominantly confirmed declines in sales of sugary drinks roughly in alignment with, or exceeding, expected price elasticity. Data on consumption also appears aligned, although not all studies were adequately designed to confirm significant change. Loud allegations that jobs would be lost as a result have not been confirmed in research from these three locations. Higher sugary drink taxes do not appear to quench thirst, and stores do brisk business in water and other drinks. Where taxes have been implemented in small areas, cross-border shopping concerns have naturally been raised.

Person pouring a sugary fizzy drink

The response from big business

The soda industry are not standing idly by. They are deeply concerned as sales of their traditional products plummet in established markets. Consequently, they are intensifying their marketing in low- and middle-income countries, even as their family-size bottles grow to three and even four litres. Faced with taxes and stronger front-of-pack labelling, they are reformulating many products and launching lower-calorie products. In the US, they are engaging in intensive lobbying and legal gymnastics to block taxes. Here in California, after four cities passed sugary drink taxes, Big Soda teamed up with the local oil and alcohol industries this year on a ballot initiative that, if passed, would make it much more difficult for cities and counties to levy any kind of tax. They are pursuing similar approaches elsewhere. In Colombia, they maneuvered to have even an educational campaign promoted by a civil society group censored by the government, an approach that was eventually thrown out by the courts.

Despite their best efforts however, sugary drink taxes are in the air. The tide is turning. When we fought for these policies a mere decade ago, they were still perceived as “ridiculous,” but now 45 jurisdictions have implemented similar taxes. This once revolutionary idea is steadily advancing towards the new “normal” – as the world recognises the gravity of the obesity epidemic and the importance of fiscal policy – as an important part of a wider package of policies to address obesity. It’s time for advocates and government authorities to intensify efforts to spread this WHO-backed policy, and for scientists to double down on generating the highest quality evidence to understand tax impact and guide best design.

  • Read WCRF International’s new policy report on sugar-sweetened beverage taxes here.
Lynn Silver | 20 June 2018

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