Public health advocates say taxes will raise the cost of high-calorie products and lead to a fall in consumption, but opponents argue that the taxes provide no health benefits. Picture: BLOOMBERG/GEORGE RUHE
Public health advocates say taxes will raise the cost of high-calorie products and lead to a fall in consumption, but opponents argue that the taxes provide no health benefits. Picture: BLOOMBERG/GEORGE RUHE

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THIS year could be the year of the sugar tax, as several large countries consider levies on sweetened food and drinks to battle obesity and fatten government coffers.

For years, public health advocates have called for such measures as one prong of an attack against a growing obesity epidemic that has fuelled rates of heart disease, diabetes and other illnesses, in both the developed and developing worlds.

Supporters hope the taxes will raise the cost of high-calorie products and lead to a decline in consumption, in the same way that tobacco taxes have helped reduce smoking. Opponents say taxes provide no health benefits, unfairly target certain types of product, hurt jobs, and burden the poor.

Scandinavian countries have had such taxes, with varying degrees of success, for many years and in 2012, France and Hungary joined the list, followed by Mexico in 2014.

But some public policy experts see them becoming more widespread, as countries seek to bolster their finances in an uncertain global economy and a new generation of savvy consumers is more concerned about health and less trusting of big corporations.

"This puts leaders in a stronger position to enact policies such as taxes because the companies aren’t considered unbreakable," says Kelly Brownell, dean of Duke University’s Sanford School of Public Policy in North Carolina.

Now India, the Philippines and Indonesia say they are studying similar levies, while Britain debated the issue in its parliament late last year and Prime Minister David Cameron said last month that he would not rule out a sugar tax.

Mr Brownell says Mexico was a watershed, given the popularity of soft drinks there. "The fact that they (drinks firms) lost in Mexico was pretty staggering."

Coca-Cola and PepsiCo, which dominate a global soft-drink market worth nearly $870bn in annual sales, declined to comment on the issue of sugar taxes.

They referred questions to trade group the International Council of Beverage Associations. Its executive director, Kate Loatman, says the bottler association in Mexico opposed the tax and "worked with legislators and the media to make the point that the tax would do nothing to improve public health".

The tax debate has focused on minerals, as health campaigners say they offer so-called "empty calories" with scant nutrition, and that those who drink them do not feel as full as when they eat solid food such as chocolate or sweets, so don’t eat less.

As a result, duties in some countries, such as France, cover drinks only, and in other places where the tax is wider, such as Mexico, the levy on high-sugar food is less than that on drinks.

The Mexican tax, which was implemented in January 2014, was part of a government policy aimed at improving the health of one of the world’s fattest nations, where 70% of adults and 34% of children are overweight or obese.

It covered sugar-sweetened foods and drinks, the consumption of which had rocketed over the past two decades.

For example, the average Mexican drank 728 235ml servings of Coca-Cola’s various drinks in 2011, up from 290 in 1991, according to a Coca-Cola chart. That compared with 2011 averages of 403 in the US and 92 worldwide.

In the first year after the 1 peso ($0.07) per litre tax was implemented, raising prices by about 10%, consumers on average bought 6% fewer soft drinks per month, according to research published last month in the BMJ journal.

However, the decline accelerated over time, reaching 12% by December. There was also a 4% increase in purchases of nontaxed drinks, such as bottled water, the study found.

"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, an independent public-health institution associated with the health ministry, said in October.

But, the effect on public health is a point of debate.

Tom Sanders, a professor of nutrition and dietetics at King’s College in London, says the level of decline seen in Mexico would be equivalent to a person consuming about one sugar cube less per day, or "a drop in the caloric ocean".

What is more, a 2014 study commissioned by the European Union found that while food taxes reduce consumption of the taxed products, consumers will often just switch to cheaper brands.

A government-appointed panel in India has proposed a tax of as much as 40% on sugary drinks as part of a broader financial overhaul. Coca-Cola India, which employs 25,000 staff, says the proposal will lead to a "sharp decline" in sales and that in such circumstances, the company will "have no option but to consider shutting down" factories and plants.

Reuters