5 reasons the sugar tax is a bad idea

1. It won’t work. Advocates of the sugar tax often point to Mexico as a prime example, but the tax has had a negligible effect on obesity and calorie intake, which is the primary purpose of the levy. The link being drawn between decreased sugar consumption and the tax being introduced is tenuous. Moreover, after an initial 6% downturn soft drinks sales are on the rise again and returned to pre-tax levels by mid-2015.

In most developed nations where soft drinks taxes have been introduced, like France, Denmark and some US states, the impact on calorie consumption and obesity has been utterly negligible. Interestingly, Denmark introduced a“fat tax” in October 2011 only to abolish it a year later and cancel the planned sugar tax because the fat tax merely cost consumers and failed to change eating habits:

The fat tax and the extension of the chocolate tax – the so-called sugar tax – has been criticised for increasing prices for consumers, increasing companies’ administrative costs and putting Danish jobs at risk,” the Danish tax ministry said in a statement.

2. It’s regressive and, like all consumption taxes, will hit the poorest the hardest as a greater proportion of their income is spent on “sin taxes” and VAT. The poorest 10% of households already pay more than 20% of their gross incomes on duties and VAT – more than double the average household.

3. It will lead to job losses. A study, by Oxford Economics on behalf of the British Soft Drinks Association, concluded that the sugar tax could lead to 4,000 job losses, with the hospitality industry and small retailers hit the hardest. A survey conducted by the Beverage Marketing Corportation found that Mexico’s beverage industry lost around 3000 jobs in the first quarter of 2014 due to the tax. The Taxpayers’s Alliance has said that the sugar tax led to 10,815 fewer jobs in the industry in all and if this was applied to Britain would result in 5,624 fewer jobs. All for nanny state virtue signalling and a untraceable impact on consumption levels.

4. Targeting soft drinks is incoherent policy. Don’t worry, you can still buy an extra-large latte, or an extra-large hot chocolate with 15 teaspoons full (double the recommended daily intake) of sugar from Starbucks without paying the tax; it doesn’t apply to milk based drinks. So grab a sugary coffee or a milkshake or a yoghurt drink and fear not. It doesn’t apply to fruit drinks either. It is specifically targeted at soft drinks because public health zealots despise soft drink companies and regard the beverages to be the “new tobacco”.

5. It will cost money. “Yes, but we can use the money to encourage kids to exercise!”. Sorry, it won’t raise money for that. It is projected to bring in a maximum of £520 million a year, but the tax will push up inflation and hit the Treasury with a £1 billion bill in 2018/19 due to the increased costs of borrowing.


 

Ben is the Conservatives for Liberty Online Director. Follow him on Twitter: @TheScepticIsle

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