TAXING SOFT DRINKS ONLY IS A SIMPLISTIC APPROACH THAT IGNORES THE CONTRIBUTION OF OTHER NUTRIENTS AND FOOD CATEGORIES TO OBESITY OR NON-COMMUNICABLE DISEASES (NCDs)
Taxes on soft drinks are discriminatory as they target a single specific food group, regardless of their sugars level, and exclude other key contributors to total sugar and calorie intake, and often without any clear scientific explanation.
- By introducing such specific taxation, governments appear to suggest that some products are undesirable in general without necessarily considering their contribution to sugars and calorie intake relative to other products, and neglect to take into account the fact that the availability and affordability of a wide range of foods and beverages, with different choices and in different portion sizes for different lifestyles, are crucial elements for any free and healthy society. Dietary guidelines suggest that all foods may be consumed in appropriate amounts as part of a healthy and balanced diet.
- Soft drink taxes can mislead the public by indirectly implying they are the main cause of obesity. Reducing soft drink intake only, without addressing other less healthy aspects of the diet, will likely not improve obesity rates or health.
- Such taxes are also particularly discriminatory in that sweetened beverages are frequently not, and by far, the main contributor to free sugars intake. Although there is high variability across countries and population groups, the EFSA Opinion on Dietary Sugars concluded that the food group contributing the most to the intake of added and free sugars in European countries is ‘sugars and confectionery’ (i.e. table sugar, honey, syrups, confectionery and water-based sweet desserts) followed by sugar-sweetened soft drinks and ‘fine bakery wares’ (i.e. biscuits, cakes, pastries).
A few examples:
- In Germany, in 2006-2016, sugar and sweets accounted for 34.2% of free sugars intake compared to 11.2% for sugar-sweetened beverages among the 3-18 years old.
- In Slovenia, in 2017-2018, bread and bakery accounted for 21.2% of free sugars intake compared to 13.4% for soft drinks among the 10-17 years old. For the adult population (18-64 years old), the proportion is 20% for bread and bakery against 15.5% for soft drinks.
- In Italy, soft drinks only account for at most 1% of the total daily calorie intake.
- Similar trends can be observed in almost all EU Member States, as indicated in the EFSA Opinion on Dietary Sugars.
Any taxation scheme aimed at reducing sugar consumption should not discriminate against one particular product category but encourage reformulation in all product categories contributing to consumers’ sugar intake. Studies which have looked at the total diet in both adults and children have reported many food groups are associated with weight gain. This is why according to the European Commission’s report “Mapping of Fiscal Measures and Pricing Policies Applied to Food, Non-alcoholic and Alcoholic Beverages”, other types of foods and beverages should be considered in the scope of fiscal policies in order to maximise the impact on public health:
‘’The taxes are small in absolute terms and apply to products that represent only a small share of households’ overall food and beverage expenditures. Therefore, the impact of SSB (sugar-sweetened beverages) taxes alone on dietary intake and health is likely to be small at best, despite consistent evidence of their effectiveness in reducing purchases of the taxed products in the available evidence base.’’ (page 11)
A study in The Lancet (2020) estimated the health and cost impact of various food taxes in New Zealand. The research team compared three broad-based levies on sugar, salt, and saturated fat with a discriminatory tax, like the one implemented in Mexico. The conclusion was unmistakable: The broad-based food taxes outperformed the selective tax by far. The findings mirror the results published by Harding and Lovenheim in 2017, who found that a broad-based tax on sugar, saturated fat, and salt was superior to any discriminatory tax on soft drinks1.
In a joint advice to the government of Chile in October 2020, the IMF and OECD also stated that “Various studies show consumers substitute the source of their sugar intake, especially from sugary foods […] Thus, the emerging consensus is that taxing nutritional content is more effective in inducing changes in nutritional habits.”
More recently, a report from the NCD Alliance concluded that “few countries have implemented excise taxes on unhealthy foods beyond SSBs, despite their importance in disincentivising diets high in fat, sodium, and/or sugar (HFSS), which are linked to NCDs”. They continued to say that “besides SSBs, excessive amounts of sugar are also consumed through other food products”.
Furthermore, when looking at data across countries, there does not appear to be a correlation between frequent soft drink consumption and obesity rates in children/adolescents. Countries with some of the highest rates of overweight and obesity have the lowest proportion of frequent sugary soft drink consumers2 . This shows that the causes of obesity are not only multifactorial, but the factors likely vary by country.
Data from the WHO shows declines in frequent soft drinks consumption in young Europeans (11,13,15 years old): more than 40% on average3. Nevertheless, overweight and obesity has increased in up to a third of countries/regions.
Some governments have actually started to recognise the limitations of discriminatory taxes. This is first and foremost the case in Finland, where the government currently explores the opportunities of introducing a broader-based excise on products containing sugar, preventing adverse substitution from taxed to non-taxed categories. The United Kingdom is rolling on a related wave. The government-commissioned National Food Strategy (July 2021) contains a proposal for a broad-based tax on sugar and a tax on salt sold for use in processed foods or restaurants and catering businesses.
1 Harding, M. And Lovenheim, M., (2017), The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes, Journal of Health Economics, 53-71.
2 COSI/WHO Europe Round 5 (2018-2020).
3 WHO Europe HBSC Surveys, 2006, 2010, 2014, 2018.