Taxing sugar: are we sweet enough?

In the first of a series of blog posts looking at the potential for new devolved taxes, we consider whether a sugar tax will work in Wales.

For the last year or so, hardly a month has gone by without a public call for a sugar tax. The BMA, the BDA, and the Health Select Committee have all advocated it in some shape or form, with a ‘pop tax’ gaining the strongest backing in Wales.

And it’s pretty clear why they are looking at what many in the food industry perceive to be a rather extreme measure. Sugar consumption in the UK is high. Very high. On average, we get around 12-15% of our daily calorie intake from added sugar in the UK, more than doubling the government recommendation of 5%.

Taxing sugar

A sugar tax is commonly referred to as an additional sales tax which is passed on to the consumer, therefore encouraging them to buy less. Some campaigners suggest it should be applied to all foods and drinks containing added sugar, while others call for a tax on sugary or fizzy drinks.

Proponents argue that it will go a long way to reducing consumption, but concede that the tax will need to be relatively high to do so. A 20% tax has been widely mooted, and evidence indicates that such a tax on sugary drinks would reduce the prevalence of obesity by 1.3% in the UK. That’s almost 200,000 fewer people with a BMI over 25.

But it’s important to mention that the purpose of a sugar tax should be about reducing consumption – not raising revenue. Hypothecating returns from a sugar tax confuses the case for it and could lead to perverse incentives if a particular project or scheme is funded by sugar tax revenues.

Why sugar?

Sugar consumption has started cropping up on health campaigners’ radars because of all the evidence suggesting we consume far too much of it. But it’s also gaining attention because of the growing body of evidence indicating that too much sugar can be really bad for our health.

Excessive sugar consumption has been linked to tooth decay, cardiovascular disease, type 2 diabetes, and obesity – all of which are already found in alarmingly high levels throughout Wales.  Over half of adults are overweight or obese, and according to the last national study, one in ten have no natural teeth remaining. Our children are not far behind – over 50% of 12 year olds showed signs of tooth decay and over a quarter of children are overweight or obese.

But would it work for Wales?

Assuming that Wales gets approval from the UK Parliament to introduce a sugar tax, there are still obstacles in the way:

1. The border problem – approximately 1.5 million people live within 25 miles of the English border, making cross-border trips to purchase sugary foods and drinks even easier than a booze cruise. It may seem absurd that people would go to such lengths, but it is worth noting that preliminary evidence has shown that Denmark’s short-lived fat tax led to an additional £12 million worth of cross-border purchases.
2. The market problem – with a population of around 3 million, it is unlikely that introducing a sugar tax in Wales will change the behaviour of manufacturers, who will probably continue offering the same recipes and product sizes to Wales’ market.
3. The economy problem – the debate for a sugar tax has largely been led by health campaigners, but some economists have highlighted the potential negative consequences of a sugar tax – including job losses, high administration costs and inflation. Of course, this shouldn’t mean that a sugar tax is out of the question (taxes on alcohol and tobacco are widely accepted while posing the same problems), but it is worth bearing in mind.

A low sugar Wales

Despite these obstacles, Wales could go ahead and introduce a sugar tax and the evidence from elsewhere suggests that it will go some way to reducing consumption.

However, it is likely that many people will continue to consume excessive levels of added sugar (either through choice, or if retailers and producers choose to absorb the cost of the tax and lower prices in response). Therefore, if we want to make Wales a low-sugar nation we must start looking at a raft of measures to do this, including mandatory added sugar labelling, bans on certain types of marketing and promotions and better education about types of sugar and where it is found.

A sugar tax is not a panacea for Wales’ sweet tooth, but if we’re serious about trying to reduce added sugar consumption we shouldn’t overlook it. It’s a very strong contender for a new devolved tax and one which we are likely to recommend for Wales. With this in mind, we’d like to know what you think – would you support a sugar tax? And do you think it will change behaviour?  Get in touch with your thoughts on a sugar tax via the contact page.

Nisreen Mansour is Policy and Research Officer at the Bevan Foundation.

Each week, we will be profiling our interim recommendations for new devolved taxes for Wales on our blog. To learn more about our work on devolved taxation, please click here.