Soft drinks as soft targets: case for sugar tax flawed

GEOFF PARKER
October 11, 2017
The Australian
Australia’s health advocacy groups, under the auspice of the VicHealth-funded Obesity Policy Coalition, are spending millions of dollars of public funds campaigning for a tax on sugar-sweetened beverages, despite there being no evidence that such a discriminatory and regressive tax reduces body weight or the incidence of overweight and obesity.
With the burden of non-communicable diseases literally and metaphorically weighing down the healthcare system, it is not right that so much money, which may be better used to treat chronic disease, is being recklessly spent on an unpopular, lightweight strategy that has been ruled out by both major parties.
The flawed logic that supports the case for a sugar tax is as simple as it is deceptive: a tax will reduce sales, which in turn will lower kilojoule intake, reduce body weight and ultimately improve health.
The US Court of Appeals in California recently picked up on this in a ruling on a law requiring soft drink manufacturers to display warning labels. The court held that “by focusing on a single product … conveys the message that sugar-sweetened beverages are less healthy than other sources of added sugars and calories and are more likely to contribute to obesity, diabetes, and tooth decay than other foods. This message is deceptive in light of the current state of research on this issue.”
The health advocates are aware of this — they’re predominantly the ones funding research to support this policy. For instance, earlier this year, academic Barry Popkin, one of the highest profile pro-sugar tax advocates, conceded that the Berkeley, California, tax ­actually caused calorie intake to rise, despite claiming that sales of taxed products fell by 9.6 per cent.
According to Popkin’s own findings, the decrease in calorie intake from taxed beverages (six calories a day, down from 45 to 39 calories a day) is statistically insignificant. However, there was a statistically significant increase in caloric intake from untaxed beverages (up 32 calories a day, from 116 to 148 calories a day) as the consumption of smoothies and milkshakes rose instead.
And in Mexico, when the 10 per cent sugar tax failed to address weight gain across the population, supporters of the tax called for it to be doubled to have a bigger impact which, incidentally, is the reason health groups in Australia are now advocating for a 20 per cent tax. What our well-funded health advocates won’t talk about is that Mexico sales are now well past pre-tax levels.
And herein lies the sugar tax’s fatal flaw: dietary behaviour cannot be predicted or controlled by a blunt economic instrument like a tax. Fundamentally, people should always be free to choose products, including those that contain sugar and those that don’t. People don’t want governments in their shopping trolleys, fridges or pantries.
And as Malcolm Turnbull asked, where do you draw the line in determining what part of the food supply should be taxed?
These taxes are regressive and hit the poorest the hardest, with studies showing them left with less to spend on healthier foods. For instance, an Australian study predicted a significant decrease in the consumption of fruit and vegetables after a sugar tax. Cornell University research into a 10 per cent sugar tax in the US found that the tax drove households to move away from soft drinks and purchase more beer.
When considering the case for a tax, it is important to look not only at consumer behaviour but also take notice of the fact the tax is targeting a single nutrient within a small and declining part of the diet.
For 15 years, sales in the water-based beverage category have been shifting away from regular sugar varieties in favour of non-sugar drinks. Across that period sugar contribution from sugar-sweetened beverages has decreased per person by 26 per cent, and today three of the top four selling soft drinks are non-sugar.
Health advocates are aware of this but consider soft drinks a soft target, and will use the proposed tax as a Trojan Horse of sorts and later expand the scope of the tax to go after other products in the discretionary aisle, particularly after they realise the tax has had no discernible impact on public health.
Australians already pay a tax on food and beverages via the GST. Imposing more GST by stealth will impose only more pressure on family budgets when most are battling with increased energy costs. All stakeholders must work collaboratively on constructive policies to combat obesity that have much more potential for a significant and lasting impact — initiatives such as the Healthy Food Partnership and the Health Star Rating system.
As we observe World Obesity Day today, with the view of promoting practical solutions to end the global crisis, I am encouraged by the Royal Australian College of General Practitioners urging stakeholders to move past the sugar tax roadblock and look to work more collaboratively with the beverage industry. My hope is in time other health groups will adopt a similar approach and collectively we can stimulate and support positive solutions to obesity.
Geoff Parker is chief executive of the Australian Beverages Council.