Sugar taxes: A case of pop policy and comic consultation

"If government really wants to reduce obesity, it will have to develop a comprehensive policy." ©iStock/DundStock
"If government really wants to reduce obesity, it will have to develop a comprehensive policy." ©iStock/DundStock

Related tags Soft drink High-fructose corn syrup

The UK's sugar tax was little more than populist light relief to brighten a speech full of economic doom and gloom. But what's worse, argues Professor Jack Winkler, is that the government's 'pseudo-consultation' about the tax is now evading every question worth asking.

Should 'slushy' ices be subject to the UK's proposed 'soft drinks industry levy'?How about 'candy sprays'? Or 'dissolvable powders'? What should government do about all those lattes laced with caramel shots ('liquid drinks flavourings' to cognoscenti)?

Such existential issues are among the 46 specific questions that make up the government's formal consultation on the levy, humanely rebranded by the media as the ‘sugar tax.’

But there are no questions about the other major sources of sugar in the British diet - chocolate, breakfast cereals, biscuits, ice cream, or the white stuff itself, in bags. Nor, more fundamentally, on whether there should be a tax at all.  ‘Alternative proposals’ are explicitly excluded.

In short, the UK government has begun a pseudo-consultation, about administration of a policy already decided, not about the policy itself.  It evades every question worth asking about the tax.

It was introduced in the March 2016 budget by chancellor George Osborne as a bit of populist light relief in a speech full of economic bad news.  He effectively proposed three levels of tax - a higher rate on products with 8 g or more per 100 ml, lower on 5-8 g/100 ml, and zero on below 5 g/ml.  Osborne has since been sacked, but the new government is carrying on.

sugar drinks beverage health OcusFocus
The three tax bands are defined very differently from the three high-medium-low sugar categories in the traffic light labelling. ©iStock/OcusFocus

Technically, Osborne only promised to consult on ‘implementation’ of the tax.  So drafting the consultation document was assigned to tax bureaucrats (aka Her Majesty's Revenue and Customs - HMRC).

But that was before it became obvious that the proposal was highly contentious.  Not just, naturally, with industry, but also with many public health specialists.

Even those who like food taxes in principle complain that this one is too narrow (only drinks, not sweet foods), with too many exemptions (fruit juices and milk-based drinks), too small to make much difference (only 20%) and regressive (hitting the poor hardest). 

Sugar banding controversy

No changes on any of these issues are considered in the consultation. Nor on the number of tax bands or their thresholds, even though the three tax bands are defined very differently from the three high-medium-low sugar categories in the UK's front-of-pack traffic light label that appears on the front of soft drinks bottles and cans.  

Several prominent brands, stigmatised as "high" in sugar by the Department of Health are virtuously tax exempt for the Treasury.

The rates of the tax, on which you might expect strong opinions from everyone, are never mentioned, much less consulted upon.

The document is so exclusively focussed on presenting the tax as an ‘incentive’ to reformulation that it never mentions the words ‘retail prices’ either.   And this despite the fact that the Office of Budget Responsibility (OBR), the government's ‘official independent fiscal watchdog’ - like most business commentators - expects the tax to be passed entirely onto the price paid by consumers.  Yet companies are never asked about their intentions on this matter.

Taxing issues

This leads onto the biggest omission of all.  The HMRC quantifies expected revenues - €588m (£500m) a year initially - but never mentions the costs of the tax.  Not even its own collection costs, much less the wider economic impact.

But the OBR expects the tax to push up the Retail Price Index.  This will trigger increases in everything ‘index-linked’ to the RPI.  That includes an extra charge of €1.2bn (£1bn) on government bonds in the first year alone.  Even larger will be the linked increases to wages, pensions and benefits.

HMRC even overlooks the revenue it will lose.  OBR notes that the ‘tax gap’ with near-by countries will create an ‘incentive for increased cross-border shopping and illicit trade,’ in an industry that already suffers a significant ‘grey market.’  That is an incentive the consultation fails to consult about.

Many commentators, friends and foes alike, have suggested that the tax is shooting at the wrong target. 

  • If you want to reduce obesity, then tax total calories, not individual nutrients.
  • If you want to cut sugar specifically, then tax sugar itself, not one product category that contains it.
  • If you want to incentivise reformulation, then tax the important product sectors that have done little of it so far: confectionery, bakery and dairy.

Because sweeteners are technically easier to use in liquids, no sweet products have undergone more reformulation than soft drinks.  Ever since Diet Coke first came to the UK in 1983, most growth in the industry has come from products with sweeteners. 

Ever since Diet Coke first came to the UK in 1983, most growth in the industry has come from products with sweeteners. ©iStock

Brexit fallout

Currently over half the sales of carbonated drinks, three quarters of dilutables/squashes, and a third of juice drinks are no-sugar or reduced sugar products.  There is still a long way to go, of course, but the industry publicly committed to further reductions by 2020, even before the tax was announced.

Most grandly of all, if you want to use price instruments to reduce sugar consumption, then adjust the most powerful economic levers of all.  Agricultural policy contains dozens.

Since 2005, the EU's Common Agricultural Policy has cut the support price for sugar by 36%.  Estimates from another government department, the UK's Department for the Environment, Food and Rural Affairs (DEFRA), indicate that the imminent removal of production quotas on sugar beet and high-fructose corn syrup will lead to further substantial falls.

Ever cheaper sugar in the midst of an obesity epidemic. These price cuts are much larger than the proposed tax, or any politically conceivable tax. 

brexit bremain uk eu referendum  altamira83
Brexit means the UK will soon have to develop its own agricultural policy. ©iStock/altamira83

Yet Brexit means the UK will soon have to develop its own agricultural policy.  It could be one that supports health rather than undermines it. But even this inevitable policy change is not mentioned in the consultation.

In sum, what the document omits is more important than what it contains. It is an attempt to sell the new tax to readers, not obtain their views on it. Disinformation not consultation.

If government really wants to reduce obesity, it will have to develop a comprehensive policy - more players than just manufacturers, more strategies than just reformulation, more nutrients than just sugar, and more instruments than just taxation.  

A good place to start would be a public consultation that actually asked the big questions.

Related news

Show more

Related products

show more

Your partner in plant-based meat alternatives

Your partner in plant-based meat alternatives

Content provided by ADM | 15-May-2024 | White Paper

Harness our technical expertise and world-class portfolio of high-quality ingredients and formulations to create elevated, chef-driven, plant-based meat...

Oat Beta-glucan – Clean Label Texturizer

Oat Beta-glucan – Clean Label Texturizer

Content provided by Lantmännen Biorefineries AB | 21-Nov-2023 | White Paper

In today's health-conscious world, consumers seek transparent labels and natural ingredients.

Related suppliers


Sugar is Genetically Modified

Posted by Stella H Howell,

How 'sweet' to impose a tax on that which is GM.
Thanks to the EU who funded this project.
Now let us uproot all such projects funded by the EU in order not only to harm all life i.e. humanity, wildlife etc. but to render our Soil dead.
Great! Soil is dissolving... it will continue.
Where will you put your feet?

Report abuse

Overall comments & notes

Posted by T Briens,

Dear Pr Winkler, thank you very much for your valuable opinion. Please see below my comments.
First of all I agree not only soft drinks should be taxed - if you compare the sugar content in %, sugar content is usually far higher in confectionnary&bakery products. Part of the reason soft-drinks are taxed is probably because the public doesn't tend to consider soft drinks as a treat, but more as daily consumed products. Also, the liquid format, allow us to drink easily a fair amount of the product without feeling any satiety.
But really, we all know UK won't solve obesity problem only with a tax on soft drinks. It is also about promoting healthy lifestyles from the youngest people's age. Simple example, it's quiet surprising to see vending machines full of sweets and sugary drinks are still allowed in schools. It's even more scary to see some kids are given by their parents a pack of crisps for morning break at school. Chips are served everyday at the canteen... Because yes, obesity is not only about excessive consumption of sugar related to your physical activity, it is also about excessive consumption of fat. Ban those habits described above would initiate what I would call an "healthier routine" for young people. This should be a priority above a "dull sugar tax".
About the tax bands, in my opinion, those values (5g/100ml & 8g/100 ml) are totally relevant - and will push the industry to reduce sugar content and hopefully relative sweetness of their products, as they already started this process for years - decades.
Retail-price : obviously the retail-price is not only set by "companies" but also by retailers. Retail price also depends on raw materials cost and other costs. Taxing the "white stuff" as you said would be a good thing but would touch all the industry, not only soft drinks.
An increase of the soft drinks retail price would encourage people to drink water - I hope - and wouldn't only solve part of the obesity concern, but also would help people to keep their teeth healthy. To me, the major problem of soft drinks is not the sugar content but mainly the corrosive action of low pH liquids on your teeth.
When you say we should tax total calories, not individual nutrient, I strongly disagree. I also studied nutrition and human physiology and we all know caloric intakes is a case by case thing.
Once again, I 100% agree to tax other sectors such as bakery, confectionary, dairy. But please, don't forget the snacks category as well. UK being the first European country for snacks consumption is obviously part of the obesity problem.
About the sweeteners - that's right - they allow you to considerably reduce and even remove sugar. Nevertheless, the final product still has the same relative sweetness as the standard product with 100% sugar. Therefore, your taste-buds are getting used to this sweetness and therefore lead your body to crave for sugar or sweetness. France has for example applied the sugar tax, also on the relative sweetness of drinks. The band is still lower but still tax the overall sweetness - no matter of the sweeteners used.
This would be a good occasion to lower overall sweetness of British foods products, far higher compared to rest of Europe/World.

I fully agree with your conclusion and overall opinion - a simple "sugar tax" won't solve the obesity problem. As a final world, when I hear such aberration as "sugar is the new tobacco", I would like to quote Parcelse :" The dose makes the poison."

Report abuse

Follow us


View more