The advisability (or otherwise) of taxing sugary foods is a hotly debated subject that encroaches on subjects such as freedom of consumption and public health expenditure, yet the World Health Organisation (WHO) has clearly stated its point of view on the matter, officially backing the sugar tax levied in Hungary, Finland and France.
The WHO’s Commission on Ending Childhood Obesity noted that there is strong evidence to suggest that applying a tax to foods and beverages containing sugar, alongside stricter regulations on publicity and at schools, would contribute significantly to an improved state of health amidst younger and older citizens alike.
The commission noted: “It is well established that the consumption of sugar-sweetened beverages is associated with an increased risk of obesity.” Additionally, children from lower-income households have the greatest risk of being overweight, and their parents are most easily influenced by the price of goods.
According to the WHO, the key to battling obesity lies in prevention. Thus, the entire population including children at schools needs to increase awareness of the connection between their food choices and the state of their health. In the UK, Public Health England (PHE) is considering applying a sugar tax of up to 20% on specific products. Prime Minister David Cameron had expressed no initial interest in the sugar tax, though his view seems to have changed in recent months.
The Hungarian experience suggests that the sugar tax has had a direct effect on consumption; a study ordered by the Hungarian confectionery association, Hunbisco, has found that the consumption of products subject to the sugar tax has decreased since 2011, when the new tax was levied on a series of products containing high amounts of salt and sugar (including soft drinks, energy drinks, snacks, sauces and condiments, etc).
This is good news for the Hungarian population, since high sugar intakes are linked to Type II diabetes, metabolic syndrome, heart disease, etc. – all of which can significantly lower one’s life expectancy and quality of life. Sugar is linked to a myriad of other problems, including premature ageing and mental conditions such as depression.
As is to be expected, Hunbisco has several issues with the sugar/salt tax. Firstly, they argue that confectioners facing financial strain now have a smaller budget to explore healthier alternatives to sugar. Innovation and new marketing initiatives are down, it seems, owing to additional payments. Currently, Hungarian confectioners pay a health tax, in addition to a 27 per cent VAT. This ups the price of products by as much as 40 per cent.
Hunbisco has additionally stated that the tax has led to the firing of employees and a lack of investment. Finally, they note that although the consumption of taxed products has fallen since the establishment of the tax in 2011, the consumption of other products which are not subject to the levy but do have similar nutritional contents (such as popcorn) has not dropped.
Hunbisco aims to convince the Hungarian government to scrap the tax and to concentrate instead on the education of customers, so they can make healthier choices. Of course, if customers did possess greater knowledge of the effects of sugar, their consumption of high-sugar foods is likely to remain at a low.
The European Commission, meanwhile, has also made its point of view clear: specific taxes on sugar, salt or fat do reduce consumption levels. It also warned, however, that higher taxes may lead consumers to buy cheaper yet equally unhealthy products, or to rely on brands selling the same product at a cheaper price. Often, cheaper products are made with more refined ingredients and contain lesser nutritional value.
The EC discussed the argument that raising the prices of goods in one country encourages cross-border shopping. They noted that this custom is actually limited and that other taxes have a greater influence on the cross-border effect. Moreover, considerable savings on public health expenditure can be made.
Currently, costs related to obesity are both direct (costs for inpatient and outpatient health services) as well as indirect (lost work, insurance, lower wages and income associated with obesity, etc). Obesity-related conditions include high blood pressure, gallbladder disease, colon cancer, postmenopausal breast cancer, in addition to the most oft-cited health issues (cardiovascular disease and diabetes).