Is 2016 the year of the sugar tax?

February 8, 2016 in Food Companies, Manufacturing and Trends, Nutrition Topics in the News, Weight Management

Is 2016 the year of the sugar tax?

For years, public health advocates have called for taxing sweetened food and drinks as one prong of an attack against a growing obesity epidemic that has fueled rates of heart disease, diabetes and other illnesses, in both the developed and developing worlds.

Supporters hope the taxes will raise the cost of high-calorie products and lead to a decline in consumption, in the same way that tobacco taxes have helped reduce smoking.

Opponents say taxes provide no health benefits, unfairly target certain types of product, hurt jobs and burden the poor.

Scandinavian countries have had such taxes, with varying degrees of success, for many years. In 2012, France and Hungary joined the list, followed by Mexico in 2014.

But some public policy experts see them becoming more widespread, as nations seek to bolster their finances in an uncertain global economy and a new generation of savvy consumers is more concerned about health and less trusting of big corporations.

Now India, the Philippines and Indonesia have said they are studying similar levies while Britain debated the issue in parliament late last year.

The tax debate has focused on soda as health campaigners say they offer so-called "empty calories" with scant nutrition and that those who drink them do not feel as full as when they eat solid food like chocolate or candy and so do not eat less.

As a result, duties in some countries such as France cover only drinks, and in some other places where the tax is wider, such as Mexico, the levy on high-sugar food is less than that on drinks.

The impact on public health is unclear

The Mexican tax, implemented in January 2014, was part of a government policy aimed at improving the health its residents, where 70 percent of adults and 34 percent of children are overweight or obese.

It covered sugar-sweetened foods and drinks, the consumption of which had rocketed over the past two decades.

For example, the average Mexican drank 728 eight-ounce servings of Coca-Cola Co's various drinks in 2011, up from 290 in 1991, according to a Coca-Cola company chart. That compared with 2011 averages of 403 in the United States and 92 worldwide.

In the first year after the 1 peso ($0.07) per liter tax was implemented, raising prices by about 10 percent, consumers on average bought 6 percent fewer soft drinks per month, according to research published last month in the BMJ journal. However, the decline accelerated over time, reaching 12 percent by December. There was also a 4 percent increase in purchases of non-taxed drinks, such as bottled water, the study found.

The impact on public health, though, is under debate.

Some experts say the level of decline seen in Mexico would be equivalent to a person consuming about one teaspoon of sugar less per day.

As well, a 2014 study commissioned by the European Union found that while food taxes reduce consumption of the taxed products, consumers will often just switch to cheaper brands.

Even so, Chile, Barbados and Dominica instituted taxes in 2015 and Belgium introduced one in January.

The impact on business

In India, a government-appointed panel has proposed a tax of as much as 40 percent on sugary drinks as part of a broader fiscal overhaul.

Coca-Cola India, which employs 25,000 staff, said the proposal would lead to such a decline in sales that it would to consider closing certain factories and plants.

India and other developing markets have been key to soft drink makers, as their increasing middle classes buy more and more packaged goods. That has helped offset weaker trends in mature markets like the United States, where soft drink sales have fallen year after year as more people choose drinks they feel are healthier.

The proposal in the Philippines would see a tax of $0.22 per liter on soft drinks, three times as much as the Mexican tax.

To keep up with changing demand, drink companies have expanded line-ups of low-calorie drinks, which are often exempt from such taxes.

Companies in the United States have also removed full-calorie soft drinks from schools, put calorie labels on the front of drinks and funded physical activity and nutrition programs.

On February 9th, Dietitians of Canada released a position statement that recommends an excise tax of at least 10-20% be applied to sugar-sweetened beverages sold in Canada.

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