A sugar tax: is it a sweet deal?

I’m used to seeing pictures of Jamie Oliver in my living room; Save with Jamie, 15-minute meals, and Jamie’s Great Britain all sit proudly on my bookshelf. But it was a bit of a surprise when he popped up on my telly appearing at Parliament’s Portcullis House. Cast your mind back a couple months and you might remember seeing the celebrity chef in front of a committee of politicians with a bottle of Pepsi. He was giving evidence to the Health Select Committee’s inquiry into childhood obesity, which launched its final report recently.

A sugar tax was one of the options we set out for plugging the health and social care funding gap in our recent report Filling the gap. Having only recently begun to focus on population health, we wanted to get a feel for this debate so I did a bit of reading around. Turns out it is a fiercely fought contest between public health campaigners (the Fors), and the food and drinks industry and think-tanks on the right of the political spectrum (the Againsts). Here’s a quick run through of the debate:

Would a sugar tax help to reduce obesity?

A systemic review of modelling studies on this topic suggests you could expect to find a proportionate reduction in consumption depending on the level of tax applied. Evidence from these studies as well as other international examples led Public Health England (PHE) to propose that a 10-20% tax on high sugar products would reduce consumption at least in the short-term. An evaluation of the sugar tax implemented in Hungary found sales of products fell by 27% with a 20-35% reduction in consumption, although it has less of an effect with fizzy drinks such as cola (which fell by only 2.7% in the first year followed by 7.5% in 2012 and 6% in 2013).

Most of us could do with halving the amount of free sugar (added sugars and those that occur naturally in things like honey) in our diets (children and teenagers consume three times the recommended amount), so it’s not surprising that the Againsts’ consider the effect of a tax to be marginal. In support of this McKinsey found a 10% tax on high-sugar, high-fat products to be quite far down the list of effective options (saving 203 Disease Adjusted Life Years or DALYs) compared to reformulation (changing what goes in the food) and portion control (how much you have) at 1,709 DALYs and 2,126 DALYs respectively. However, those in the Fors camp feel that a tax would send a clear message to society and act as another tool in the fight against obesity – a view taken by the Health Select Committee.

What impact would it have?

Our recent report suggests that a 10-20% price increase on currently taxed sugary products could bring in between £1.9bn to £3.4bn a year at first, which would go some way to help fill the funding gap for the health service. So given that we’re drinking and smoking less (a really positive trend), why isn’t the chancellor rushing to tax another one of our potentially lucrative vices?

If you’ve been siding with the Fors up to now, this is where the Againsts start to really show their cards. ‘Sin taxes’, like a sugar tax, are known to be regressive – they disproportionately hit the poorest in society. From what I can see this not only relates to the direct cost of the product taxed but some wider factors too. For example, the Institute of Economic Affairs argues that the fat tax introduced, and then repealed, in Denmark contributed to inflation rising to 4.7% in the same year that wages fell by 0.8%. Add administrative costs and job losses on top of this and you can see where the Againsts are coming from.  

To rebut the regressive argument, the Fors argue that the poorest in society experience poorer health outcomes and stand to benefit more. For example, in Mexico they found that the greatest reduction in consumption of sugary drinks came from people in lower socio-economic groups. However, according to the Financial Times the Mexico case is not without controversy. Modelling of a sugar tax in the BMJ did not predict a fall in consumption among lower socio-economic groups in the UK and indeed our report concluded that the literature available is insufficient to strongly inform policy on this topic in the long-term. 

What should we spend it on?

According to Jamie Oliver we should split any revenue down the middle and give half to the NHS to fund preventative measures and half to schools in order to educate children and improve their relationship with food, both of which seem sensible and laudable. Indeed our view was that although these measures could be used to plug the funding shortfall for the NHS it is probably more appropriate to direct any revenue into public health programmes aimed at the poorest in society – who would bear the greatest financial burden.

I’ll leave it up to you to decide whether it’s a good idea. However, if you’re interested, our report and the committee’s inquiry into childhood obesity are well worth reading.

Lewis is Public Affairs Officer at the Health Foundation