EMOTIONAL TAXES LACK ECONOMIC CREDIBILITY

22 June 2016
The Greens are the latest party to jump on the sugar tax bandwagon, joining certain celebrities with clear publicity objectives in calling for the possible taxation of soft drinks in attempt to counter obesity. The Australasian Association of Convenience Stores (AACS) has reinforced that an educational – not emotional – approach is the only way to achieve better health outcomes.
The Greens have reportedly proposed a flat 20 per cent excise to be paid by producers or importers of water-based beverages with more than five grams of sugar per 100ml, based on the product’s retail price.
AACS CEO Jeff Rogut said the Greens’ suggestion is not only lazy, it highlights a lack of economic credibility and a lack of understanding of consumer behaviour to view taxation as a blanket solution to issues like obesity.
“There is no rational basis to believe increasing taxes on certain products will result in improved health outcomes,” Mr Rogut said.
“Tobacco is a prime example. As the Government continues to raise excise on legal tobacco, more and more consumers are simply switching to cheaper alternatives and the illegal tobacco market continues to flourish, fuelling alarming health and safety consequences for the broader community.”
Mr Rogut called on Governments not to shirk their responsibility to invest in the necessary resources to inform and educate consumers on issues relating to societal health.
“Better health outcomes are not achieved by taxing certain consumers and placing additional burdens on small businesses. The only available evidence suggests that education, potentially in the form of wellness and awareness programs, is the most effective way to achieve improved health outcomes,” Mr Rogut said.
“Many market leaders, including beverage producers, are already investing in healthier alternatives. The demand from consumers for healthier products encourages a natural market response, and supporting these endeavours makes much more sense than the uninspired, flawed response of simply raising taxes.”
Mr Rogut pointed to the example of Denmark, where the Danish Government announced the scrapping of the fat tax it introduced just 12 months prior and cancelled plans for a sugar tax, following the disastrous failure of the policy.
According to the Danish tax ministry, increased prices for consumers and increased administrative costs created a bureaucratic nightmare for producers and retailers, and put Danish jobs at risk. All the while, Danes simply travelled across the border to make their purchases.
“Applying tax to certain items because those items have an emotional association to obesity in the minds of some groups is not only flawed, it’s short-sighted and lazy. It’s also economically destructive,” Mr Rogut said.
Mr Rogut said that if introducing a tax on soft drinks is to be pursued, logic suggests it would have to encompass all sweetened drinks such as flavoured milk, iced teas, fruit smoothies and otherwise healthy juices.
“The economic ramifications for manufacturers, suppliers and retailers would be immense, yet the potential for such measures to achieve improved health outcomes is unknown,” Mr Rogut said.
Further information:
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores
Ph: +61 467 873 789
Media enquiries:
Stephen Naylor
Wise McBaron Communication
Ph: +61 (2) 9279 4770