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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The views expressed in this article are that of the author and do not necessarily reflect the views of Conservatives for Liberty

  • Jasper Menkus

    6. It discourages personal responsibility and implies that it is the government’s obligation to tell you what you can and can’t eat.

  • Nkaplan

    Perhaps I am missing something here, but re point 5, doesn’t increased inflation lower the cost of debt by, in effect, devaluing it?

  • I disagree with the entire post. The logic for taxing sugar is the same as the logic for taxing tobacco and alchohol; making something more expensive should reduce its consumption, and reducing its consumption is a good thing to do.

    Personally I would go further, and just put an excise tax on all sugar, without worrying about where it is used.

    Point 5 is the weakest point of all.

    At present inflation in the UK and in many other countries is below the official target; it too low. Indeed Japan is making heroic, though so far unsuccessful attempts to put up inflation. Raising inflation is currently a good thing, rather than being undesirable. The argument that it will affect interest rates is simply incorrect in an environment where the Bank of England decides short term rates by fiat, and is busy reducing long term rates by more quantitative easing.

    • Daniel Hammond

      High taxation simply creates black markets cigs are 60% to 80% of black market sales in New York alone! Guess how much of the worlds tobacco is bootleg likely 50%

      • I agree that there are limits to taxation beyond which one gets serious black markets. That is why the prohibition of alcohol failed in the USA.

        My expectation is that the proposed sugar tax is not anywhere near such limits.

    • FergusReturns

      “reducing its consumption is a good thing to do.”

      No, it is not. Coercing people into not buying something they like is, pretty much by definition, a VERY VERY BAD thing to do.

      • You lost that one well over a century ago. The state takes action to discourage (if not ban entirely) many activities people like to do including drinking alchol, smoking, gambling and driving without a seat belt.

        I support such state action in most cases, unless it is demonstrably damaging. Name calling such as “the nanny state” does not bother me; nannies are normally acting in your best interest.

        • Drinking a COke is akin to driving without a seatbelt… good grief.

    • SO, you would support the raising of the sugar tax exponentially in a similar way to tobacco and alcohol, thereby costing all consumers for the excesses of the few? The so-called “obesity crisis” has come about because people do not do enough of exercise, consumption of soft sugar added soft drinks has declined in recent years as the industry adapts, and sugar consumption overall has reduced over the last three decades. People are overweight because of sedentary lifestyles and lack of exercise. If we want to educate people on food and exercise, provide facilities and fitness programmes etc. Fine, that would be effective, and if that requires funding it should be done via general taxation, not regressive consumption taxes. This tax will have a neglible effect on consumption and public health, in line with every other country that introduced it. I find it particularly troubling that you go along with the lobby line that “sugar is the new tobacco”.

  • All the same arguments could have been used against tobacco taxes. Let’s just head toward a world where every supermarket will be filled with items in identically sized opaque cubical boxes colored puke green or turd brown (perhaps denoting liquids and solids respectively for ease of shopping). 75% of the packaging would sport large warnings and 3-D color pics of diseased organs and oozing bedsores and grisly corpses so children will learn what food does to them, and the brand names could all be in 10 point plain type in a small space somewhere on the bottoms of the packages. Taxes could be standardized at a uniform 400%, just about the same as for cigarettes: we’d see obesity rapidly decrease and as for regression, well, the poor will be helped the MOST as they become healthier and skinnier! In terms of job losses, there’ve almost certainly been millions due to antismoking policies and we’ve absorbed them with our economies all remaining robust and happy and healthy (they are, aren’t they???) so there’s no worry about any harm.

    It’ll be a wonderful, happier, healthier world once we’ve implemented these measures!

    Who could possibly object?

    – MJM, a smoker, as you might have guessed by now…

  • Daniel Hammond

    He’ll just ban fat people from eating in public while outlawing all foods with anything man made in them. Oh wait sugar isn’t man made lol

  • Daniel Hammond

    ………..OSHA also took on the passive smoking fraud and this is what came of it:

    Reference Manual on Scientific Evidence: Third Edition

    This sorta says it all

    These limits generally are based on assessments of health risk and calculations of concentrations that are associated with what the regulators believe to be negligibly small risks. The calculations are made after first identifying the total dose of a chemical that is safe (poses a negligible risk) and then determining the concentration of that chemical in the medium of concern that should not be exceeded if exposed individuals (typically those at the high end of media contact) are not to incur a dose greater than the safe one.

    So OSHA standards are what is the guideline for what is acceptable ”SAFE LEVELS”

    OSHA SAFE LEVELS

    All this is in a small sealed room 9×20 and must occur in ONE HOUR.

    For Benzo[a]pyrene, 222,000 cigarettes.

    “For Acetone, 118,000 cigarettes.

    “Toluene would require 50,000 packs of simultaneously smoldering cigarettes.

    Acetaldehyde or Hydrazine, more than 14,000 smokers would need to light up.

    “For Hydroquinone, “only” 1250 cigarettes.

    For arsenic 2 million 500,000 smokers at one time.

    The same number of cigarettes required for the other so called chemicals in shs/ets will have the same outcomes.

    So, OSHA finally makes a statement on shs/ets :

    Field studies of environmental tobacco smoke indicate that under normal conditions, the components in tobacco smoke are diluted below existing Permissible Exposure Levels (PELS.) as referenced in the Air Contaminant Standard (29 CFR 1910.1000)…It would be very rare to find a workplace with so much smoking that any individual PEL would be exceeded.” -Letter From Greg Watchman, Acting Sec’y, OSHA.

    Why are their any smoking bans at all they have absolutely no validity to the courts or to science!