Yes, I’m talking about the ‘sugar levy’ George Osborne announced today as part of his ‘budget for the next generation’.
Starting with words of warning about childhood obesity, Osborne continued “industry can act, and with the right incentives I’m sure it will.”
For him, the right incentive is a sugar levy applied according to volume and sugar content of soft drinks.
Osborne thinks he is being smart by calling this a ‘sugar levy’ rather than a ‘sugar tax’ and taking it directly from producers and importers rather than applying it as a sales tax. But make no mistake – an extra business cost means a rise in prices, and the function of this sugar levy is exactly the same as a sugar tax.
So what will it do?
Osborne says he wants to use this sugar levy to encourage reformulation and decrease consumption of sugary drinks.
Data from around the world, compiled by the IEA, says that it doesn’t do an awful lot. Real world evidence shows that demand for sugary drinks remains the same regardless of price, but that people often switch to cheaper brands or cheaper shops – or to other high calories drinks including fruit juices and milkshakes (both of switch are handily excluded from this levy).
Sugar levies are regressive – hitting poorer people hardest – and there is no evidence that sugar taxes have any health benefits. The only real effect these taxes do have is to raise money for the Treasury.
I don’t know if you’ve noticed, but soft drinks is one category where there is a huge amount of consumer choice. Full sugar, low sugar and no sugar drinks are all available. There is some demand for them, but manufacturers have repeatedly found that even when presented with a range of alternatives many people still prefer the full sugar versions.
So what will manufacturers do? Will Coca-Cola just stop making original Coke to avoid this levy? I don’t think so – it will continue giving customers what they want, not what government tells them they should have.
But the total ineffectiveness of a sugar levy against its stated aims is not why Conservatives for Liberty opposes it. For us, this is about the purpose and role of government.
We think that individual choice and responsibility are important. We think that parental responsibility is important. And we think that the best way to encourage individual responsibility is not to repeatedly erode it with nanny state measures.