Two recent reports reached different conclusions regarding the question of whether to tax sugar-sweetened beverages.
The report “Sugar consumption at a crossroads” released in September by the Credit Suisse AG Research Institute, Zurich, Switzerland, recommends a tax.
“We believe higher taxation on ‘sugary’ food and drinks would be the best option to reduce sugar intake and help fund the fast-growing health care costs associated with diabetes type 2 and obesity,” the report said.
In contrast, a study published on-line July 29 in the American Journal of Agricultural Economics raised questions about whether a tax would have overall positive health effects.
“Instituting a sugary beverage tax may be an appealing public policy option to curb obesity, but it’s not as easy to use taxes to curb obesity as it is with smoking,” said Chen Zhen, Ph.D., a research economist at RTI International, Research Triangle Park, N.C., and lead author of the paper. “Consumers can simply substitute an untaxed high calorie food for a taxed one. And as we know, reducing calories is just one of many ways to promoting healthy eating and reducing nutrition-related chronic disease.”
Specific states in the United States already have such taxes. France and Denmark have had differing results with their taxes. Mexico is considering a tax on sugary drinks.
The Credit Suisse report cites a health policy report called “The public health and economic benefits of taxing sugar-sweetened beverages” that was published Oct. 15, 2009, in The New England Journal of Medicine. That report said a tax of 1c per oz of beverage would increase the cost of a 20-oz soft drink by 15% to 20%. A national tax of that nature would raise $14.9 billion in the first year alone.
The Credit Suisse report said a tax would help local, state and federal governments raise funds to address health issues and invest in education and research.
“We see only positive implications if health is the main consideration,” the Credit Suisse report said.
The report recognized other foods and beverages besides soft drinks have sugar.
“Soft drinks are not essential to our diet as are bread, pasta or rice,” the report said. “Water is always a viable alternative. In addition, the beverage industry accounts for one-third of all added sugars in our diet.”
The Credit Suisse report pointed out that added sugars represent 17% of a normal U.S. diet. Credit Suisse estimated 43% of added sugars come from sweetened beverages. The World Health Organization recommends added sugars should contribute no more than 10% of total calorie intake.
What about sodium and fat?
The other study published in the American Journal of Agricultural Economics was a joint effort from researchers at RTI International, Duke University and the U.S. Department of Agriculture. The Robert Wood Johnson Foundation and the National Institutes of Health funded the study.
The study said a tax of a half cent per oz would increase the price of a 20-oz soft drink bottle by 10c. The tax potentially would reduce total calories from the 23 foods and beverages examined in the study. A half cent per oz tax on carbonated soft drinks, sports/energy drinks and juice drinks might bring a reduction of 7.9 calories per capita per day. It also is predicted to lead to increases of 0.2 grams of fat per capita per day and 49.8 mg of sodium per capita per day.
“These results suggest that unintended consequences of (sugar-sweetened beverage) taxes are possible, and the expected benefits of any proposed (sugar-sweetened beverage) tax has to be evaluated against its potential costs,” the study said.
The tax was predicted to reduce per capita purchases of sugar-sweetened beverages by 113 oz per quarter. Other decreases might come in milk, 100% juice and bottled water. Consumption might increase for carbonated soft drinks. Food categories predicted to increase in demand because of a hypothetical tax on sugar-sweetened beverages included white bread, whole grain bread, cheese, cereal, canned/dried fruits, canned vegetables, frozen dinners, canned soup, candy and snacks.
Researchers used data about household food purchases from the 2006 Nielsen Homescan panel, a consumer panel maintained by The Nielsen Co., New York. Families in the panel received a hand-held scanner and scanned the Universal Product Code of products they purchased.
Both studies said taxes on sugar-sweetened beverages would affect more people at the lower income level than at the higher income level. The Credit Suisse report added a tax might have a positive health effect if the poor and less educated, who are affected more by obesity and metabolic syndrome, drank fewer sugar-sweetened beverages because of the added cost.
Taxes already in place
The Credit Suisse report mentioned governments that have tried or investigated taxes on sugar-sweetened beverages. In the United States, 33 states either have effected taxes on soft drinks or put legislation into place stating that soft drinks are non-exempt from state taxes, unlike other foodstuffs.
When reached for comment by Food Business News, Christopher Gindlesperger, senior director of public affairs for the
Washington-based American Beverage Association, pointed to the examples of Arkansas and West Virginia. Both states have had taxes on sugary drinks since the last century, and both states were among 13 states that had a prevalence of obesity greater than 30% in 2012, according to the Centers for Disease Control and Prevention, Atlanta. Arkansas was at 34.5% while West Virginia was at 33.8%.
Mr. Gindlesperger said comprehensive programs are more likely to have success than taxes that single out one product.
“Obesity is a complex issue and multifactorial,” he said.
The Credit Suisse report also mentioned sugary drink taxes in other countries. A tax in France led to a 5% drop in soft drink volume last year.
Denmark this July reduced a tax on soft drinks by half, and the country plans to scrap the tax entirely next year. The country lost out on potential tax money when Danes crossed into neighboring countries to import less-expensive soft drinks.
President Enrique Peña Nieto of Mexico has proposed a bill that would apply a tax of one peso (8c) for each liter of sugar-sweetened beverage.
“Mexico might be a game-changer in this area and become the first of the large soft drink consumer markets to impose a significant excise tax on full-calorie soft drinks as part of the new government’s budget later this year,” the Credit Suisse report said.
According to Credit Suisse, Mexico ranks No. 3 globally in per-capita soft drink consumption and No. 2 in global obesity rates. The question remains: Would a tax on sugar-sweetened beverages have any effect on those rankings?