How to turn the tide on ‘underused’ sugar taxation in Europe?
The World Health Organization (WHO) is an advocate of sugar-sweetened beverage (SSB) taxation. According to the UN agency, it can be a useful tool, amongst others, for governments to help prevent non-communicable diseases (NCDs).
Some countries in Europe have already implemented sugar taxes or levies. These include Belgium, Finland, France, Hungary, Ireland, Latvia, Monaco, Norway, Portugal, and the UK.
For the most part, these countries’ taxes apply to carbonated soft drinks containing sugar, but some have also incorporated sweetened milk, juice, and artificially sweetened beverages into the legislation.
“Taxation is a cost-effective policy that can improve health at national level. By introducing taxes on sugary drinks, countries can reduce consumption levels of these beverages and lower the associated risks of overweight and obesity, diabetes and other associated disease,” said Dr Kremlin Wickramasinghe, acting head of the WHO European Office for the Prevention and Control of Noncommuncable Diseases.
However, uptake of SSB taxation is not as high as the WHO would like. Only 10 out of the 53 countries in the WHO European Region have implemented SSB taxes on a national level.
“SSB taxation is underused in the WHO European Region – only 19% of countries have adopted the measure,” said Wickramasinghe, who has co-authored a new report investigating what opportunities and challenges exist in enforcing effective SSB taxation.
The report is based on a study conducted by the WHO European Office for Prevention and Control of Noncommunicable Diseases in collaboration with researchers at the University of Sydney, Australia.
The study found that every country in Europe that had enforced a SSB tax targeted industry, rather than consumers.
Some countries in Europe that have enforced SSB taxes did so with the explicit aim of reducing consumption of SSBs and/or sugar. This was the case for France, Hungary, Ireland, Latvia, Norway, Portugal, and the UK. Further, t taxes were designed to achieve an explicit objective of reformulation, through differential tax rates with thresholds based on sugar content, This occurred in Hungary, Latvia, and the UK, and via revised taxes in Finland and France.
For all countries, tax design was influenced by both health and economic considerations. But some Member States chose to focus on the economic effects of the SSB taxes. In Belgium, Finland, France, Hungary, Norway and Portugal, for example, revenue generation was linked to addressing a budget deficit.
Often, policymakers continued to rework or improve the taxes in response to new evidence of experience of SSB taxation in other countries. Following the implementation of the UK’s two-tiered tax structure, for example, France and Norway made the decision to follow suit.
Not everyone wants SSB taxes
Of course, as could be interpreted by the low uptake of SSB takes across Europe, not everyone is in favour of these forms of taxation.
Some, including players in the beverages industry, are sceptical that taxation truly brings about public health benefits.
“Evidence of a strong positive impact of food or ingredient taxes on public health remains scarce to date,” a spokesperson from FoodDrinkEurope told FoodNavigator.
Further, it has been suggested that shifting consumer purchasing behaviour does not always result in healthier choices. “Whereas fiscal measures may shift consumer purchasing behaviour, this does not always result in healthier choices, for example if the consumer buys substitute products or shops across their country border.”
Another point made by the trade association is that taxation is a ‘regressive instrument’, meaning that they hit the less affluent consumer more.
“In times of a global pandemic and the likely economic recessions societies are likely to face in the coming years, we are not convinced that this is the most appropriate policy tool for consumers or businesses, particularly the SMEs still struggling with the impact of coronavirus.”
The WHO report noted that SSB taxes were strongly opposed by actors in the food and beverage industry in all the study countries, both before and after implementation, for the reasons reiterated by FDE.
The researchers did not conclude, however, that industry suffered significant losses as a result of tax enforcement: “It was clear from media reports in Finland, France, Portugal and the UK that SSB taxes had a minimal economic impact on industry.”
The aim of the study was to inform decision-makers and support the effective implementation of SSB taxation across the European Region, added Dr Wickramasinghe.
While there are ‘many different patterns’ of SSB tax used across Europe, overall the WHO recommended that the tax base reflect the health burden of consumption, as well as cultural patterns of the country in question.
It was also judged that design and implementation of SSB taxes would be more successful if both finance and health policymakers developed the measures in collaboration. And that as was evidenced in a number of countries, authorities know they can continue to improve them to align with new evidence and experiences of SSB taxation in other countries.
And finally, that support from non-governmental organisations, academics, and other social actors can prove an ‘important asset’ in fostering SSB tax adoption.