This month, the UK announced a plan to end childhood obesity
The plan includes a soft drinks tax
What would you do to avoid paying more taxes? Legally, that is.
That question is facing soft drink manufacturers the world over – most recently in the UK – and will eventually become a subject for many food producers and providers as governments realize the potential to use taxes to regulate what companies put in their products.
Today, nations’ introduction of taxes and levies are forcing companies producing sugar-sweetened beverages and soft drinks to reconsider their formulas or the quantity of their servings, all with a focus on one particular poison: sugar.
There can be as much as 33 to 35 grams of sugar in a can of soda, taking a child over their daily recommended allowance in both the UK and US with just one drink serving. Consuming these drinks has been linked to obesity and associated conditions such as type 2 diabetes. Controlling it at the state level is a way to control reduce today’s burden of obesity, among both adults and children.
“Sugar-sweetened beverages are a massive problem across the world,” said David Cavan, director of policy and programmes at the International Diabetes Federation. “If we think about alcohol and tobacco, nearly every government uses their power to govern how they’re consumed … but with food, various governments have said it isn’t their role to do that.”
That is, until recently.
The obesity bulge
Globally, more than 600 million adults were obese in 2014, and 42 million children younger than 5 were overweight or obese in 2013. The numbers among children are projected to rise to 70 million by 2025, with one in five adults also obese, if nothing changes. Cue the influx of taxes to curb what some experts call a public health emergency, fueled by the overconsumption of foods high in fat or sugar.
“Just as alcohol and tobacco were a public health issue … sugar is a public health issue,” Cavan said. “And tackling it early is essential.”
Taxes are just one of many state control measures that have been tried out worldwide. Others include rules for food labeling, so people can see just how much sugar is in their food; restrictions on marketing and advertising of foods high in sugar; and restrictions on availability of these foods in schools.
Their impact is hotly debated, but taxes have many advocates.
“Taxes are important and should be effective,” said Dr. Claude Marcus, professor of pediatrics at the Karolinska Institute in Sweden, who has been working with obesity among children and policies to prevent it.
When a government taxes a product, he believes, not only does it make people tighten their purse strings, it sends a signal that an item is dangerous.
“It’s an important way [to control intake], and I see no reason why we shouldn’t use it,” he said.
Marcus has been involved with recommendations to the Swedish government to introduce taxes on sugary drinks while removing taxes on fruits and vegetables to make them more affordable. “Then, you can get a double effect,” he said.
Where has it been done?
Mexico instituted a 10% tax on sugary drinks, such as juice and soda, in 2013. It resulted in a 10% rise in the cost of these products in 2014, according to a study in the British Medical Journal. The same study also found that purchases of taxed beverages fell by 6% in the first year of implementation, while sales of water and non-taxed beverages rose by 4%.
However, the improvements and differences in sales have been contested by some experts.
“That was a success,” argued Cavan, who also salutes the Chilean government for its black-label approach to children’s breakfast cereals, highlighting those high in sugar. Combined with information campaigns, the labels placed a stigma on certain cereals.
But not all these programs have worked.
Denmark instituted a “fat tax” on foods containing more than 2.3% saturated fats, introduced in October 2011. The tax was abolished the following year after the public failed to accept it and instead crossed into neighboring Germany to stock up on food.
“It was difficult to implement, as it covered such a wide range of foods,” Cavan said, including dairy, meats and processed foods.
The UK has become the latest to implement such plans with the announcement of a soft drink levy as part of a larger Plan for Action (PDF) against childhood obesity. A recent report found that 9% of children ages 4 to 5 and 19% of children ages 10 to 11 measured in the UK’s national child measurement program were obese.
The details of the levy are yet to be decided, but companies have been given two years to bring down the levels of sugar in their drinks. For those that don’t, the revenue from the tax will be invested in school programs to reduce obesity nationwide, including greater access to sports and healthy breakfast clubs.
More plans are also to be implemented, including asking all food retailers and manufacturers to reduce the amount of sugar in their foods by 5% within the next year and by 20% by 2020.
But experts have criticized the plan as too weak and nothing new. They cite the voluntary nature of the latter reduction goal, the gap of two years before the drinks levy will be enforced and the lack of regulation on advertising and promotions on foods high in sugar, which were advised by Public Health England. “There were a lot of strategies that could have been introduced, and they’ve all been watered-down or removed,” Cavan said.
“The UK plan relies heavily on voluntary action by the food and beverage industry,” said David Studdert, professor of medicine and law at Stanford University, who has published studies reviewing global efforts to control sugar consumption. “Other countries, including the US, have also turned to self-regulation. It will be interesting to see how well this works, [but] if history is a guide, it’s hard to be optimistic.”
Pushback against taxes
Unsurprisingly, the industry has fought back at rulings that sugar in soft drinks needs regulation.
In response to the UK plan, which was announced this month, the British Soft Drinks Association warned of job losses and said taxation would have minimal impact.
“Given the economic uncertainty our country now faces we’re disappointed the Government wishes to proceed with a measure which analysis suggests will cause thousands of job losses and yet fail to have a meaningful impact on levels of obesity,” Gavin Partlington, director general of the soft drink association, said in a statement.
“Our action on reformulation and smaller pack sizes is clearly working and in 2015 we became the only category to set a voluntary calorie reduction target of 20% by 2020,” he said, adding, “We’ll share the evidence during this consultation in the hope Ministers reconsider a measure that is both unnecessary and harmful to the economy.”
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But advocates of taxation and regulation argue that the industry has a vested interest in preventing these rule changes. “The food and beverage industry has a central role to play in addressing this public health problem. But they also have stockholders,” Studdert said.
“The link between these illnesses and unhealthy food and drink is indirect and accumulates over time … and there’s a powerful and at times manipulative industry involved,” he said.
“I don’t think we can rely on the market to sort this one out. Regulation is needed.”