German sugar tax: Support spreads for levy on sweetened beverages to boost health

24 Jun 2024 --- Nine German states are embracing the idea of a sugar tax on sugar-sweetened beverages (SSBs), proposed by Germany’s Minister for Food and Agriculture Cem Özdemir (Greens) as a way to improve public health. Implementing the levy is estimated to save the country €16 billion (US$17.4 billion) in healthcare costs and productivity losses over the next 20 years.

The states backing the soft drinks levy are Brandenburg, Bremen, Hamburg, Mecklenburg-Vorpommern, Lower Saxony, Rhineland-Palatinate, Saxony, Thuringia and Saarland.

“From a public health perspective, taxation of SSBs should be considered as a policy option for German decision-makers to reduce consumption of added sugar and improve population health,” notes a Plos Medicine study that analyzed the projected health and economic impacts of sugar-sweetened beverage taxation in Germany.

However, the study also pointed out that modeled SSB taxation scenarios that lead to “reformulation toward less sugar” might have a larger population-level health and economic impact than those that incentivize consumer behavior change only through increased prices.

The country previously urged the manufacturers to voluntarily reduce sugar content in carbonated drinks, leading to only a 2% reduction in sugar content in the beverages.

Sugar tax can save Germany €16 billion in 20 years, says a study.Earlier this month, experts called for an expansion of a similar UK soft drink levy and reduction of the sugar content threshold to improve its effectiveness.

Bringing sugar down
The WHO and the German Nutrition Society recommend a limited sugar intake by adults, no more than 50 to 60 g per day, with lower limits for children.

“Regular consumption of SSBs, including soft drinks, flavored milks, energy drinks, vitamin waters, fruit juices and sweetened iced teas, is associated with an increased risk of dental cavities, type 2 diabetes, weight gain and obesity in both children and adults, heart disease, stroke and cancer,” flags the organization.

Implementing taxes on SSBs increases product prices and reduces demand, resulting in less purchases. A one time global SSB tax increase that raised prices 50% could generate additional revenues of US$1.4 trillion over 50 years, adds the WHO.

A number of countries have taken fiscal measures to protect people from unhealthy products. Mexico imposes an excise tax on non-alcoholic beverages with added sugar and Hungary taxes packaged products with high sugar, salt or caffeine levels.

In 2018, Norway raised the tax on sugar and artificial sweeteners by around 80% and saw a drop in the sale of soft drinks.

In the Netherlands, the Dutch generally agree that such a tax is acceptable, as long as the revenues are used to support public health initiatives. But there is a great deal of disagreement among stakeholders about the “effectiveness, suitability, social and economic effects” of a sugar tax, an unfavorable political context and a strong lobby against a tax on SSBs, highlights a 2022 Vrije Universiteit of Amsterdam study.

In India, consumers pay 28% in tax for drinks with added sugar, leading to a price surge and consequently a drop in sales. The Philippines, South Africa and the UK also tax sugary drinks.

The UK introduced a two-tiered sugar tax in 2018 which raise the price of sugar-sweetened soft drinks, with a lower rate of 18 pence per liter for beverages with a total sugar content between 5-8 g per 100 ml and a higher price of 24 pence per liter for drinks with total sugar more than 8 g per 100 ml.

Fostering better health
A study conducted by Munich’s Technical University analyzed all modeled SSB taxation scenarios, indicating that the levy is likely to improve population health and reduce societal costs in the country by preventing cardiometabolic disease.

Soft drink levies can potentially motivate consumers to consume less of these drinks.Findings from a University of Cambridge research also suggested that a similar UK sugar tax led to a decrease in the number of cases of obesity among 5,000 older primary school children, notably girls.

The tax further holds potential in reducing cases of dental issues among children. A recent study published in the BMJ Nutrition, Prevention & Health journal indicated that the country’s sugar tax causes a 12% reduction in tooth extractions due to decay among children within two years of its implementation. 

Moreover, a levy on SSBs can potentially motivate consumers to consume less of these drinks and incentivize the F&B industry to reduce the sugar content in beverages, suggests another study in Germany.

These findings support the potential of a similar tax in Germany improving consumer health and reducing health costs associated with health complexities brought on by high sugar consumption.

Is it worth it?
While such initiatives hold importance from a consumer health perspective, experts have questioned their effectiveness.

Last year, campaigners flagged the potential weaknesses of a research that highlighted sugar tax’s role in preventing obesity in children, arguing that the levy is not solely responsible for decreasing child obesity. “We would like to see the food and drink industry moving faster to reformulate products high in fat, salt and sugar,” a Sustain Children’s Food Campaign spokesperson previously told our sister website Nutrition Insight.

Germany’s Federal Minister for Food, Christian Schmidt also previously expressed dissatisfaction with a tax on sugary drinks based on the UK model.

Meanwhile, Detlef Groß, president of the German association for the non-alcoholic beverages, remarked that “obesity is a complex phenomenon,” one that cannot be stopped by a one-sided discriminatory tax on a single product category. He also flagged that soft drinks account for only a small part of the daily caloric intake and the sector offers consumers a wide range of options, both with and without sugar.

Germany’s Health Minister Karl Lauterbach previously remarked that introducing a sugar tax would only make sense if the additional money raised was used to subsidize healthy food, such as reducing the VAT on fresh fruit and vegetables.

By Insha Naureen