A recent report has revealed that the UK sugar tax introduced in 2018 has been very effective at reducing the amount of sugar consumed by both adults and children in the country.
Today, I’d like to take a deeper look at sugar taxes. What are they? How do they work? Where are they used? Are sugar taxes good? Or bad? Or should they be even more extensive?
A sugar tax is a levy (meaning an extra tax or fee) placed on items containing high levels of sugar, especially sugary drinks.
The tax is applied based on the sugar content of the product or drink and is designed to encourage drink manufacturers and companies to put less sugar in their drinks and encourage consumers to choose sugar free alternatives.
A number of countries have introduced sugar taxes, but the one I’m most familiar with is the UK sugar tax (technically known as the “soft drinks industry levy”).
As part of an anti-obesity campaign in 2016, the UK announced they would target companies selling high sugar drinks. If a drink contained 8 grams of sugar or more per 100 millilitres, they would need to pay 24p in extra tax, and if it contained between 5 and 8 grams of sugar they would need to pay 18p in extra tax.
Considering the price of a bottle of a soft drink (usually called a fizzy drink in British English) was about £1.50 at the time, this was quite a high level for companies to pay.
The levy was introduced in 2018 and, at the moment, the UK sugar tax only applies to beverages (and not all drinks), but we will talk about the future in more detail later in this episode.
Different Types of Potential Sugar Tax
Sugar taxes are designed to change our behaviour (and the behaviour of companies) by making sugary drinks too expensive.
The taxes could work in a few different ways.
The government could tax based on the size of a product. For example, any product containing over a certain amount of sugar could be taxed at $0.10 cents per litre.
The government could tax based on the price of a product (rather than the size). For example, a 10% tax on a £2 soda would result in an extra 20p charge.
Or, like the UK sugar levy, the taxes could be tiered. For example, a product with 5 grams of sugar per 100 millilitres might incur a lower tax than a product with 10 grams of sugar per 100 millilitres.
I think this system is best as it incentivises manufacturers to reduce sugar content to lower the amount of tax they will pay, and it can also influence consumers to choose products with lower sugar levels.
I have not bought a full sugar soft drink in the UK for years because the sugar free versions are significantly cheaper.
Why Introduce Sugar Taxes?
The rationale behind introducing sugar taxes is very important in modern society. Public health and obesity are major issues in many countries, and sugar taxes are just one policy governments can introduce to tackle these issues.
The first thing a sugar tax is designed to do is reduce the amount of sugar people consume. High sugar intake is associated with numerous health problems, including obesity, type 2 diabetes, cardiovascular diseases, and dental issues.
Reducing sugar consumption can help lower the chances of chronic diseases. For instance, evidence suggests that cutting back on sugary drinks can decrease the risk of obesity and diabetes, which in turn can reduce healthcare costs and improve overall public health.
Chronic diseases often disproportionately affect low-income populations. By reducing the consumption of sugary products through taxation, the goal is to decrease health disparities and promote health equity.
There are also economic considerations.
Illnesses related to high sugar intake, such as diabetes and heart disease, impose significant costs on healthcare systems. Sugar taxes can help reduce these costs by decreasing the incidence of these conditions.
Revenue from sugar taxes can be used to fund public health initiatives, such as obesity prevention programmes, nutritional education, and subsidies for healthier food options.
These taxes could also have behavioural effects.
First, they can change consumer behaviour (the people buying the drinks like you and me). Increased prices can lead to reduced consumption of the taxed products. Like I mentioned before, I don’t buy sugary drinks anymore… if I want a soda I only buy sugar free!
Second, they can change manufacturer behaviour.
To avoid higher taxes, manufacturers might reduce the sugar content in their products or reformulate them to meet lower tax thresholds. This can lead to overall healthier product options in the market.
