Sugar Tax: For Supporters, 2016 May be the Sweet Spot

It could also be the year for the sugar tax since several countries are considering levying taxes on sweetened food items and drinks to combat obesity and fill up public coffers.

Since the beginning public health experts have been calling for such measures as a part of a plan to fight the growing obesity epidemic, which has fueled the rise of heart disease and diabetes, among other ailments that affect people in both developed and developing nations, the advocates hope that the tax will boost the price of products that are high in calories and result in a decrease in consumption, the same way as taxes on tobacco have reduced smoking. The opposition says taxes do not provide health benefits and unfairly focus on certain goods. They are not a good choice and can hurt the economy and burden low-income people.

Scandinavian countries have been subject to these taxes, with different levels of success for several years. Then, at the end of 2012, France and Hungary were added to the tax list. They before Mexico in 2014. However, some experts in public policy believe that they will become more common as nations attempt to boost their finances in a turbulent global economy and as a new generation of intelligent consumers is more worried about their health and less distrustful of large corporations. “This puts political leaders in a stronger position to enact policies such as taxes because the companies aren’t considered unbreakable,” said Kelly Brownell, dean of Duke University’s Sanford School of Public Policy in North Carolina.

The time is now. India, The Philippines, and Indonesia have announced that they are looking into similar tax rates as Britain discussed the issue in the British parliament late in the year. Prime Premier David Cameron said in January that he was not ruling out the possibility of a sugar tax.

Brownell stated that Mexico was a watershed due to the popularity of soft drinks in the country. “The fact that they (drinks companies) lost in Mexico was pretty staggering,” Brownell said. Coca-Cola Co. and PepsiCo are the two most prominent players in the global soft drink market, with a market worth close to $870 billion annually; they did not discuss the subject of sugar taxes. They directed questions to the trade group International Council of Beverage Associations (ICBA). ICBA President Kate Loatman said the bottler association in Mexico opposed the tax and “worked with lawmakers and the media to make the point that the tax would do nothing to improve public health.”

When asked about India, India, the Philippines, Indonesia, and Britain, she replied: “While we understand that there are discussions occurring in those countries, the bottom line is that taxes do not improve public health in any country.”

Tax debates have centered on sodas as health advocates claim that they provide “empty calories” with scant nutritional value and that people who drink them don’t have the same feeling of fullness as they do when they eat a solid meal such as chocolate or candy, and therefore take in as much.

This means that duties in certain countries like France include only beverages, as well as in countries with higher tax rates. For example, in Mexico, the tax on food items with high sugar content is less than on drinks.

HEALTH IMPACT UNCLEAR

Tax on Mexicans Mexican tax, which was implemented on January 1, 2014, is part of a plan by the government to improve general health and well-being in one of the most obese nations, in which 70% of adults and 33 percent kids are obese or overweight.

It also covered sugar-sweetened food items and drinks, consumption of which has risen in the last two decades.

For example, the average Mexican consumed 728 eight-ounce portions of Coca-Cola Co’s drink options in 2011, an increase from 290 units in 1991, according to the Coca-Cola Company chart. It differs from the averages of 403 across the United States and 92 worldwide.

In the first year following that 1 percent ($0.07) per liter price tax was introduced, increasing prices by approximately 10 percent; people typically purchased six percent fewer soft drinks each month, according to research published in the BMJ journal. But the decrease accelerated as time went on and reached 12 percent by the end of December. The study also found an increase of 4 percent for purchases of tax-free drinks such as water bottles, as the survey revealed.

“The implementation of this tax in Mexico as a measure to prevent obesity and diabetes has positioned our country internationally as a leader in public health,” the National Institute of Public Health of Mexico is an independent healthcare institution that is part of the Ministry of Health, said in October.

However, the effect on the population’s health is a matter of contention.

Tom Sanders, a professor of dietetics and nutrition at King’s College London, said the decline rate in Mexico could be comparable to someone eating one sugar cube less each day, which is “a drop in the caloric ocean.”

Furthermore, the study commissioned in 2014 by the European Union found that while food taxation reduces the consumption of taxed items, most consumers change to less expensive brands. Because very little evidence is available on the subject, there is evidence that needs to be more conclusive on what extent taxes might benefit the public’s health.

But, Chile, Barbados, and Dominica implemented taxes in 2015, and Belgium added taxation in January.

In India, a panel appointed by the government has suggested a tax as high as 40 percent on sweet drinks in a more significant fiscal overhaul.

Coca-Cola India, which employs 25000 employees in December, said that the plan would result in a “sharp decline” in sales and that under such conditions, it could “have no option but to consider shutting down” specific manufacturing facilities and factories.

India and other developing markets have been crucial to the production of soft drinks since their expanding middle classes are buying more packaged items daily. This has helped to offset less favorable trends in markets that are more mature, such as those in the United States, where soda sales have been declining for the past ten years because more consumers are choosing drinks they believe are healthier.

The plan in the Philippines, approved by a House of Representatives committee in November but is a long way to get through before it is passed, would be taxed at $0.22 per liter for soft drinks. It’s three times more than the Mexican tax and will indeed cause a disruption to the market, with a lot of potential experts say.

To keep up with the ever-changing demands, beverage companies have expanded their range of drinks with low calories, typically exempt from taxes.

The companies in the United States have also removed all-calorie sodas from their schools, placed calories on their drinks’ labels, and funded programs for nutrition and physical activity.

The tax in Mexico was an essential step as it provided “a point of proof that it can be done and have an impact” on consumption, according to Kelly Henning, who leads public health initiatives within Bloomberg Philanthropies, the former New York City mayor’s charity that helped to fund the campaign for the Mexican tax.