Soft drinks tax is of greatest benefit to poorer households: Lancet

By Will Chu

- Last updated on GMT

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©iStock
Taxes levied on sweetened drinks and snack foods are of most benefit to the poor in helping to make long-term healthy lifestyle changes, a Lancet study concludes.

The work, part of a series of five papers about non-communicable diseases and economics, pours water on claims the taxes would place lower-income households at a disadvantage.

“No amount of money, however small, is trivial for low income households, especially in low income countries,”​ said Franco Sassi, lead study author and professor of international health policy and economics at Imperial College.

“But the extra tax expenditures involved should not deter governments from implementing a policy that may disproportionately benefit the health and welfare of lower-income households.

“Governments must carefully assess the available evidence from their own countries and look at the tax system as a whole, including investing tax revenue in 'pro-poor' programmes or subsidising healthy alternative products.”

UK soft drinks levy

The Lancet’s​ collection of research coincides with the introduction of the UK’s soft drinks industry levy, which came into effect last week.

The levy rate applies to those drinks with a total sugar content of 5 grams (g) or more per 100 ml (18 pence (€0.20) per litre) and those with 8 g or more per 100 ml (24 pence (€0.28) per litre.)

The levy applies to those drinks that include pure cane sugars such as sucrose and glucose as well as substances that contain sugar such as honey.

Professor Sassi said that the levy’s effects would be most notable in lower-income consumers, in which a greater share of the weekly household shopping bill is devoted to sugar-sweetened drinks.

“Lower income households are the heaviest consumers of sugar-sweetened drinks and have the highest risk of obesity, diabetes and other chronic diseases,” ​he said.

“The new sugar levy will go a long way to helping poorer people become healthier and should also ease the burden of chronic diseases on the NHS. The extra tax burden it will involve for the poor is very small.”

As well as action taken in the UK, the study also looks at the impact of taxes on soft drinks, alcohol and tobacco in other countries.

Total tax revenues

Data from the Organisation for Economic Co-operation and Development (OECD) show that in 2015, tax collected in the UK and Hungary amounted to 3.3% of total tax revenues.

In Denmark, tax on saturated fat content in foods accounted for 0·14% of total tax revenues between 2011 and 2012.

In 2014, Mexico introduced a soft drinks tax in which the country recorded a 12% reduction in taxed drinks purchased by December of that year.

It too recorded the greatest change amongst lower-income households, which according to the figures represent a reduction of around four litres of sugar-sweetened drinks.

The Mexican government revealed that part of the revenues were being used to provide potable water to public schools mainly for children in lower-income and middle-income populations. 

“Non-communicable diseases are a major cause and consequence of poverty worldwide,”​ says Dr Rachel Nugent of RTI International (Seattle, USA) and chair of The Lancet Taskforce on NCDs and economics.

“Responding to this challenge means big investments to improve health care systems worldwide, but there are immediate and effective tools at our disposal.

“Taxes on unhealthy products can produce major health gains, and the evidence shows these can be implemented fairly, without disproportionately harming the poorest in society.”

Source: The Lancet

Published online ahead of print: doi.org/10.1016/S0140-6736(18)30531-2

“Equity impacts of price policies to promote healthy behaviours.”

Authors: Franco Sassi, Annalisa Belloni, Andrew Mirelman, Marc Suhrcke, Alastair Thomas, Nisreen Salti, Sukumar Vellakkal

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3 comments

Sugar Tax

Posted by Philip Rogers,

It is coming to something when we assume that by pricing something out of reach of the poorest in society, this is a "good thing". Obviously taking a lead from tobacco taxes this is now being applies to sugar. As the findings from Mexico show, these taxes simply raise money for the governments to distribute as they feel fit. It is hardly "democratic", rather a "big brother" approach. Obesity is a totally different problem ,and will not be influenced in any way by this heavy handed approach. Governments always are urged to "do something" and this is simply a knee jerk reaction, which will have little impact. We have a similar situation with litter, where the deposit proposal will simply wreck the economics of local authority waste collection and recycling for the sake of pandering to a hard hitting TV programme. Plastic in the ocean is not a UK or even European problem, so let's identify the problem and then act.

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No

Posted by Brad,

It is utter chicanery to pretend that a regressive consumption tax delivers the "greatest benefit" to the poor. It raises the question of how these health zealots even define a "benefit": is it people being able to satisfy their preferences to a greater degree? Or is it people doing as instructed by health authorities?

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Sugar Tax

Posted by Dave,

If you take a walk, I'll tax your feet. [G. Harrison]

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