WASHINGTON EXAMINER: In a new report, the World Health Organization fails to endorse higher taxes on sugar in order to fight noncommunicable diseases. For the last two years, the U.N. body has been calling for even higher sugar taxes, which would lead to reduced consumption and therefore better overall public health. However, the WHO advocates are […]
FEE: In yet another move to crack down on fun public health hazards, the French government reached an agreement with the parliament for a new tax on sugary drinks. How long are people going to continue to accept the modern Nanny State?
Newfoundland is creeping toward a fiscal cliff.
The province’s debt load is more than $12 billion, which is approximately $23,000 per resident. COVID-19 has obviously worsened that troubling trend, with this year’s budget deficit expected to reach $826 million.
Just this week legislators proposed a handful of tax hikes to help cover the gap, ranging from increasing personal income tax rates for the wealthier brackets, increasing taxes on cigarettes, and the outright silly concept of a “Pepsi tax.”
In one year’s time, the province will implement a tax on sugary drinks at a rate of 20 cents per litre, generating an estimated almost $9 million per year in revenue.
Finance Minister Siobhan Coady justified the tax, beyond the need for revenue, stating that the tax will “position Newfoundland and Labrador as a leader in Canada and will help avoid future demands on the health-care system.”
When described like that, a Pepsi tax sounds harmonious. Who doesn’t want to curb obesity and generate revenue?
Unfortunately for supporters of the tax, the evidence isn’t really there.
In one year’s time, the province will implement a tax on sugary drinks at a rate of 20 cents per litre, generating an estimated nearly $9 million per year in revenue.
Unfortunately for supporters of the tax, the evidence isn’t really there. In one year’s time, the province will implement a tax on sugary drinks at a rate of 20 cents per litre, generating an estimated nearly $9 million per year in revenue.
Consumption taxes like this are often highly regressive, meaning that low-income residents bear most of the burden, and are ultimately ineffective in achieving their public health goals.
Looking to Mexico provides a good case study on the efficacy of soft drink taxes. With one of the highest obesity rates in the world, Mexico enacted a soft drink tax, increasing prices by nearly 13 per cent, with the goal of reducing caloric intake. A time-series analysis of the impact of the tax showed that it reduced consumption of these drinks by only 3.8 per cent, which represents less than seven calories per day. Estimates from Canada also show the same. When PEI’s Green Party proposed a soft drink tax of 20 per cent per litre it was only estimated to reduce caloric intake from soft drinks by two per cent, which is approximately 2.5 calories per day.
While these taxes do in fact reduce consumption to some degree, the reductions are so small that they have virtually no impact on obesity rates. To make matters worse, taxes like this aren’t just ineffective in combating obesity, they are heavily regressive. Looking again at the data from Mexico, the tax they implemented was largely paid for by those with a low socioeconomic status.
In fact, a majority of the revenue, upwards of 63 per cent, was generated from families at, or below, the poverty line. If we take the province’s estimation of $9 million a year in revenue, it is reasonable to assume that $5.67 million of that revenue will be coming from the pockets of low-income Newfoundlanders.
In other jurisdictions south of the border, like Cook County Illinois, no soda tax has avoided the uncomfortable reality of being incredibly regressive, which is partly why they eventually abandoned the tax altogether.
Newfoundlanders need to ask themselves, is it worth implementing a heavily regressive tax on low-income families to move the needle on obesity by a few calories a day? I’d argue that the negatives of the tax far outweigh the benefits, and that’s before business impacts enter the equation. This also happens to be the same conclusion found in New Zealand.
The New Zealand Institute of Economic Research, in a report to the Ministry of Health, stated that “We have yet to see any clear evidence that imposing a sugar tax would meet a comprehensive cost-benefit test.”
While both budget shortfalls and obesity are serious problems, a “Pepsi tax” isn’t a serious solution.
Originally published here.
By Thomas Walker Following the introduction by the British government of a tax on sugary carbonated drinks in April 2018, intended to improve public health and combat obesity in children, some campaigners have started calling for similar taxes on a wider range of products. NHS Chief Medical Officer Prof. Dame Sally Davies, described by the […]
GLOBAL NEWS: LISTEN: North American Affairs Manager of the Consumer Choice Center and sugar tax opponent David Clement.
Whichever way you look at it, Britain is facing an obesity crisis. A study into long-term public health in England and Scotland published earlier this month reached the startling conclusion that obesity is causing more deaths than smoking, with nearly two thirds of British adults now overweight.
This past year has brought rising obesity levels into sharp focus because of the effect that being overweight seems to have on the fatality of Covid-19. According to research from the World Obesity Federation, nine out of ten deaths from coronavirus occurred in countries with high obesity levels, which might go some way towards explaining why the UK has seen a disproportionately high death toll.
This issue has not passed the Government by. Led by a man who was elected on a platform of halting ‘the continuing creep of the nanny state’, this Conservative Government has unveiled a raft of policies designed to ease the pressure on Britain’s weighing scales, including the sugar tax, a ‘junk food’ advertising ban and even a fund – with a £100m price tag – which is apparently designed to bribe people into losing weight.
The problems with these policies are too numerous to count. Sin taxes hit the poor harder than anyone else, making the weekly shopping trip more expensive for families who are already struggling. The junk food ad ban is set to remove around 1.7 calories, or half a Smartie’s worth of energy intake, from children’s diets per day – according to the Government’s analysis of its own policy. And the state-funded version of Slimming World sounds like something that comes out of a pop-up book of policies. Yes, and ho!
It is unclear why Boris Johnson, who was able to lose weight after his brush with Covid without any of these new Government-sponsored initiatives in place, is now so firmly of the belief that the Government must crack down on unhealthy eating if we are to have any hope of slowing down the increase in obesity rates – especially when the private sector is doing most of the hard work voluntarily.
Tesco, for instance, recently bowed to external pressure by committing itself to increasing its sales of healthy foods to 65% of total sales by 2025. Time and time again, when there is an issue people care about, companies go out of their way to do their bit – even at the expense of their bottom line. We saw the same thing happen when the world woke up to the reality of climate change, with businesses eagerly signing up to costly net-zero plans.
Positive moves like this from incumbent giants are complemented by the wealth of innovation taking place around obesity. Semaglutide, a diabetes drug, was recently found to be extraordinarily effective in helping people lose weight. Even something as innocuous as sugar-free chewing gum might just represent part of the solution. Datasuggests that the mere act of idle chewing suppresses the appetite, resulting in a 10% reduction in the consumption of sweet and salty snacks.
Crucially, these remarkable steps towards a less obese Britain can take place at no cost to the taxpayer, free of the grip of Whitehall bureaucracy and at an astonishing pace. We have just lived through a year in which the Government pumped billions into a near-useless ‘test and trace’ system and repeatedly failed to clarify whether or not drinking coffee on a park bench is illegal. If there is one incontrovertible lesson we can surely take from that, it is that we should not leave such important tasks to the state.
Sugar is the new tobacco, so we need to be smart in how we tackle it. Sporadic, ill-thought-out Government interventions like banning Marmite adverts are not the answer. Private-sector innovation, not centralised policy, is Britain’s best hope of slimming down.
Originally published here
Opinion: A sugary drink tax shouldn’t be dismissed just because it fails to achieve its goals. It is also heavily regressive.
By David Clement
Canada has an obesity problem, both for adults, and for children. When you look at the numbers, they immediately jump off the page. Since 1978, the obesity rate for Canadians has more than doubled. In 1978, the number of adults who were considered obese was 14 per cent. In 2014, that figure was 28 per cent. General forecasts on this trend state that the number of adults who are obese could rise to 34 per cent by 2025. Rates of obesity this high create a myriad of negative health outcomes, and cost the health-care system billions of dollars annually.
There have been a variety of policies proposed to help curb obesity. Most recently was the call for a national soft drink tax by Liberal MP Julie Dabrusin. Specifically, Dabrusin is calling for a 20-per-cent tax on sugar-sweetened beverages. The thought process here is simple: if you excessively tax a product, it will end up discouraging the purchase of that product, which will lead to better health outcomes and lower expenditures on obesity-related illnesses. The problem with this new tax proposal is that these sin taxes almost always fail to achieve their desired outcome, and have the negative externality of being heavily regressive against the poor.
Sin taxes almost always fail to achieve their desired outcome
Dabrusin’s goal of healthier outcomes is a noble one, but excessively taxing sugary drinks isn’t a serious solution. We know from other jurisdictions that additional taxes on sugary drinks rarely achieve their goal of reducing caloric intake in any meaningful way. For example, Mexico, a country with an obesity rate near 70 per cent, enacted a sugary drink tax with the goal of reducing caloric intake, thus producing better health outcomes. An analysis of the impact of the tax showed that it reduced consumption of these drinks by only 3.8 per cent, which represents less than seven calories per day. A reduction of this size can hardly be considered a success.
Domestically, we have seen several proposals for sugary drink taxes. In the past provincial election in New Brunswick, Green Party Leader David Coon proposed that the province enact a sugary drink tax of 20 cents per litre. The proposed tax would have added taxes on all pop, most juices, all carbonated water, all non-carbonated flavoured water, most teas, drinkable yogurts and flavoured milk. The major issue with this provincial version of what Dabrusin is proposing is that the designers of the tax scheme openly admitted that it was unlikely to make any significant impact on caloric intake. According to the Green Party’s own submission, the 20-per-cent tax was at best going to reduce overall sugary drink intake by two per cent a year.
At the most, the New Brunswick tax would reduce caloric intake for the average resident by a measly 2.5 calories per day. This estimate was created by using full-calorie soft drinks as a reference point, meaning that the total caloric reduction could actually be much less than 2.5 calories per day given that consumers often consume other sugar-sweetened beverages with fewer total calories than full-calorie soft drinks. It is safe to say that reducing caloric intake by, at most, 2.5 calories per day would have no significant impact on public health. We don’t yet have Dabrusin’s projections on caloric-intake reductions, but from what we can see at the provincial level, the impact wouldn’t be significant in any way.
A sugary drink tax shouldn’t just be dismissed because it fails to achieve its goals. It should also be dismissed because it is heavily regressive. Mexico, again as an example, shows that taxes like the one proposed have a devastating impact on low-income families. The majority of the tax revenue generated from the Mexican tax came from low-income families. Specifically, 61.3 per cent of the revenue generated came from households with low socioeconomic status. Thus, the funds raised were derived from the most vulnerable in society. Supporters of Dabrusin’s proposed tax have cited that the revenue generated would be around $1.2 billion per year. If the Mexican regressive trend holds true for Canada, which can be assumed because it was apparent in cities like Philadelphia, then $732 million of that $1.2 billion will come directly from low-income Canadians. This is an uncomfortable fact that supporters of the tax have yet to sufficiently address.
$732 million of that $1.2 billion will come directly from low-income Canadians
Soft-drink taxes are simply bad policies being used to combat a real problem. These taxes almost always miss their mark, and disproportionately impact low-income consumers. These truths are part of the reason Cook County, Ill. (which includes Chicago) repealed its soft-drink tax. Because of these fairly consistent trends, the New Zealand Institute of Economic Research, in a report to the Ministry of Health, stated that “We have yet to see any clear evidence that imposing a sugar tax would meet a comprehensive cost-benefit test.” It’s clear that obesity is a problem in Canada, but it is also clear that soft-drink taxes don’t pass the cost-benefit test, and shouldn’t be considered as a serious solution.
— David Clement is the North American Affairs Manager for the Consumer Choice Center.
Nanny-state types know this. They just don’t care. In Britain, Europe and across the world, taxes on tobacco, alcohol and sugar are used by governments to try to push people into what they deem to be healthier lifestyles. Indeed, nanny-state policies are infesting Europe through its political institutions. In a recent memo, the European Commission set out plans […]
On Election Day in 2018, Washington voters passed an ordinance to curb local governments’ efforts to pass additional taxes on grocery items, including meats, beverages, produce, dairy, grains, and more. The 55-45 percent vote was no doubt a win for the consumers, but so far reaction to the local tax ban has been negative. Why? […]
As the Consumer Choice Center has been keen to point out in several articles and campaigns, additional taxes and levies on sugary drinks end up being regressive and hurting the very people they aim to help: minorities and the poor. Now, minority leaders in Philadelphia, seeing the toll the taxes have had in their communities, […]
