Australia: Grattan Institute Calls for Tax on Sugary Drinks

24 Nov 2016 --- The Grattan Institute is urging the Australian government to introduce a tax on sugary drinks that would see a 40 cents per 100 grams levy on all non-alcoholic, water-based drinks that contain added sugar - and the estimated AUD$500 million a year raised could be used in the fight against obesity. According to the recently published report, Australians are getting fatter with more than one in four adults now classified as obese, up from one in ten in the early 1980s. About 7 per cent of children are now obese and obesity is predominantly caused by people eating too much unhealthy processed food, often at considerable cost to their health and quality of life.

The institute believes the best option would be a tax that would increase the price of a two-liter bottle of soft drink by about 80 cents and generate a fall of approximately 15 per cent in the consumption of sugar-sweetened beverages, as consumers switched to water and other drinks not subject to the new tax.

Speaking to FoodIngredientsFirst Grattan Institute health program director, Stephen Duckett, says: “It was pleasing to see that the Treasurer did not rule out a sugary drinks tax yesterday. Such a tax is inevitable in Australia, the only question is timing. My expectation is that we will see such a tax in the next five years.”

“The tax rate we propose was set to recover the costs of obesity attributable to sugary drinks. If people paid that tax, they would be meeting the costs of that they create. Our report only looked at a tax. A comprehensive strategy is required to address obesity, of which tax should play a part.”

As obesity rises in Australia, people are more likely to go to doctors and be admitted to hospital and obese people also more likely to be unemployed and therefore pay less tax than the rest of the population, says the report. 

However, any new tax would not be a “silver bullet” to the health epidemic, it warns. “That would require a suite of new policies and programs. But the proposed tax would encourage healthier lifestyles. Consumption of sugary drinks needs to be reduced because most of them contain no nutritional benefit.”

Calls for a tax on sugary drinks in Australia follow a long line of countries where either similar levies have already been introduced or tax introductions are looming. Several countries, spanning several different continents, cite that taxing sugar is one of the best ways to tackle obesity and the subsequent strain that ever-expanding waistbands are having on global health services. Portugal is one of the latest adopters with government plans to bring in a levy next year increasing the cost of a 330ml soda by around 5.5 cents, raising a projected €80 million for public health. 

There are also similar laws in France, Mexico, Hungary and forthcoming legislation in the UK and South Africa. The number of US cities experimenting with a tax on sugary drinks is also growing after Albany, Oakland and San Francisco in California and Boulder in Colorado voted to pass a levy last week as part of a public health drive and growing anti-sugary soda movement. Berkeley in California also has a tax and in September the American Beverage Association filed a lawsuit in an attempt to block the soda tax in Philadelphia. 

The World Health Organization (WHO) is even officially encouraging governments to impose legislative measures by taxing sugary drinks. It says that rolling out laws around the world would curtail sugar consumption and impact on diabetes rates. Fiscal policies where at least a 20 percent increase is introduced to the retail price of sugary beverages would result in “proportional reductions in consumption”, according to the report, published in October.

However, there remains mixed reaction and beliefs when it comes to measuring the outcomes and success of sugar taxes across the world, with critics claiming taxes are not a solution to public health problems. Many think a broader approach is needed to combat obesity; one that looks at increased physical exercise, better nutrition, improved food education and overall calorie reduction as a way of addressing the obesity epidemic and associated diseases.

But, the Grattan report says: “It can be argued that people ought to be free to make those choices and bear the consequences. But the damage is done not just to consumers, and market failures can contribute to the overconsumption of unhealthy foods. The problem confronted in this report is that excessive consumption of unhealthy foods, including sugar-sweetened beverages (SSBs), not only causes long-term problems for consumers but also imposes enormous costs on the broader community.”

National body, the Australian Healthcare and Hospitals Association agrees government action is urgently needed to curb the consumption of sugary drinks in Australia.

“Our consumption of sugar-sweetened beverages is among the highest in the world, with Australians and New Zealanders consuming an average of 76 liters of these drinks per person every year—that’s simply way too much,” says AHHA Chief Executive Alison Verhoeven. “Excess consumption of sugar-sweetened drinks may be responsible for about one-fifth of the average weight gain among Australians over the last 25 years. The other main causes are consumption of energy-dense nutrient-poor foods, and a lack of exercise.”

Verhoeven says cites cordials, soft drinks, energy drinks, sports drinks, fruit and vegetable drinks, and fortified waters, as a major source of sugar in Australian diets and consumption is clearly associated with obesity, type 2 diabetes, cardiovascular disease, tooth erosion and decay, and bone density problems.

“We therefore call on the Australian Government and the state and territory governments, as a matter of urgency, to develop and fund evidence-based measures aimed at reducing consumption of these drinks. This could include taxing sugar-sweetened beverages; restricting sales in hospitals and schools; stronger advertising restrictions, especially during children’s television viewing times; mandatory front-of-package ‘healthy star’ labeling; and public awareness campaigns.”

“Sugar-sweetened drink taxes have already been introduced in Mexico, France, Norway, Chile, Finland, Hungary, St Helena, Mauritius, French Polynesia, Samoa, Tonga and 33 states in the USA. The UK is introducing a 20 percent sugar tax in April 2018. And a report released by the Grattan Institute sets out options and recommendations for such a tax. The early signs are that increased taxation has led to reductions in the purchase of sugary drinks as well as reductions in the sugar content of drinks produced by drink manufacturers.”

The Grattan Institute says how the money is allocated is a debate for later. But Australia should introduce the tax now because it would reduce the number of people who become obese and ensure fewer taxpayer dollars have to be spent on the damage done by obesity.

by Gaynor Selby