5 A tax on full sugar soft drinks
The case for a tax on full sugar soft drinks
72.Since 2013, an increasing number of health organisations—now totalling over 60—have campaigned for the introduction of a tax, or levy, of up to 20% on sugar-sweetened drinks.77 Jamie Oliver, in partnership with Sustain, the Children’s Food Campaign, recently petitioned the House on this issue, gaining over 150,000 signatures.78 We heard evidence in person from Jamie Oliver and Sustain as the House’s response to the petition.
73.Public Health England’s evidence review on sugar reduction includes a recommendation on the introduction of a tax on full sugar soft drinks, listing this as one of the eight measures it recommends:
Introduction of a price increase of a minimum of 10–20% on high sugar products through the use of a tax or levy such as on full sugar soft drinks, based on the emerging evidence of the impact of such measures in other countries.79
74.PHE state that “Increasing the price of high sugar food and drink, whether through taxation or other means, is likely to reduce purchases of these products, at least in the short term.”80 Their report provides further discussion of the evidence base:
Evidence from both stakeholders and current research studies suggest that increasing the price of high sugar foods and non-alcoholic drinks, whether through taxation or other means, is likely to reduce purchases of these products at least in the short term. There is reasonably consistent evidence from both experimental studies and data from countries that have introduced taxes that consumers can respond to changes in food and drink prices with the effect being larger at higher levels of taxation or price change. These findings align with the evidence from modelling studies which indicate that a tax would lead to a reduction in purchases proportionate to the level of tax applied, suggesting a tax of 10% to 20% would be necessary to have a significant impact on purchases, consumption and ultimately population health.
Data on the effectiveness of [taxes in other countries], while not always robustly evaluated, suggests that reductions in sales have been seen as a result of the imposition of taxes in Norway, Finland, Hungary, France and Mexico. Following the introduction of a tax on sugar sweetened drinks of 10% in Mexico, an overall average 6% reduction in purchases of sugar sweetened drinks was seen in 2014, with higher reductions in purchasing of around 9% on average being seen in lower socioeconomic households. Outcomes from the triangulation of results from the primary research and stakeholder interviews show consistency. 81
The likely impact of a tax on full sugar soft drinks
75.The principle behind introducing a tax or levy for a health purpose is to draw a clear price differential between the less healthy, taxed product, and the untaxed product. For this reason, we heard the view that a tax targeted specifically on sugar sweetened soft drinks would be more effective than a tax on all soft drinks or all carbonated drinks.82
76.Concerns have been expressed that the food and drink industry may simply absorb the cost of a tax rather than passing it on to customers, thereby negating its impact on price. The evidence from other countries is that the ‘pass on rate’ varies from over 100% in some countries where taxes have been introduced to 50% in others.83 We also heard the argument that consumers may simply switch to cheaper, non-branded sugar-sweetened drinks.84 However others argued that there is good evidence to suggest that people would in fact move away from sugar-sweetened drinks to other categories of beverage.85
77.We also heard that the introduction of a tax may have a ‘halo’ effect—a reduction in purchasing caused by increased health awareness around the launch of the tax,86 rather than the impact of the price increase itself—and that it is difficult to isolate this impact from longer term impacts, although the ‘halo’ effects themselves may play an important role:
The evidence suggests that increasing the price of high sugar products by 10–20% or more through the use of a tax or levy would be likely to have an effect on purchasing behaviour and therefore sugar consumption at least in the short term. It would seem logical that this would lead to a reduction in consumption and therefore sugar intakes although the current evidence has some limitations. The evidence also makes it difficult to separate changes in purchasing patterns resulting directly from price increases caused by the taxes from the ‘halo’ effect of the tax introduction, such as media articles, activity by campaigners and increased public awareness. However, these may be important components in enabling whole systems approaches to reducing sugar consumption and levels of obesity.87
78.Another argument which we heard against the introduction of a tax on full sugar soft drinks was that its impact would be so small as to be unmeasurable, and that a tax high enough to have a significant effect would be too large to be contemplated.88 Chris Snowdon of the Institute of Economic Affairs pointed out that tobacco is now taxed at around 700%. However, the emerging evidence—as presented by Public Health England—suggests that although the impact on purchasing is higher the higher the level of taxation, an impact on purchasing can be seen even with taxes of under 20%.89
The impact of a tax across income groups
79.It has also been argued that a tax on sugar sweetened drinks would be regressive:
The 20% tax, I believe, is going to raise £1 billion. This means it is going to take £1 billion out of people’s pockets. It is going to take it disproportionately from the poor.90
80.A tax imposed uniformly may be considered regressive if, as a proportion of income, more is taken in tax from low-income households than those households further up the income scale. Tobacco taxes are another example of a regressive tax. Public Health England responded to this point:
One thing that came up from the Committee earlier was that this is imposing additional costs on the least advantaged. That is not the point of the tax. The point of the tax is to nudge people away from purchasing those things towards purchasing things that are more in keeping with a healthy balanced diet….91
81.Industry representatives told us that there are a wide and growing variety of low-sugar and no-sugar drinks now on sale in the UK that people could switch to.92 Initial data from Mexico suggest that the reductions in the purchase of sugary drinks has been greater amongst the most deprived in society, although it is not possible to say that this would translate into an identical effect in the UK.93 Modelling studies using UK data also predict that a tax on sugar-sweetened drinks would have a greater impact on people in lower income groups. We were told that this is for two reasons—firstly more sugary drinks are consumed by those in lower income groups, but also there is higher price sensitivity within those groups.94
82.Witnesses also emphasised that the greatest burden of ill health falls upon the lowest socio-economic groups—something which is demonstrated clearly by the data from the childhood measurement programme, which shows that obesity is twice as common amongst the most deprived children as the least. Therefore the benefits of measures to tackle childhood obesity, such as a tax on sugar sweetened drinks, will be felt most amongst those groups.95 Responding to queries about the regressive nature of a tax on sugar sweetened drinks, Jamie Oliver referred to data from the National Child Measurement Programme:
This bit of information highlights to you that the most vulnerable people in this country are four to 11-year-old disadvantaged children. Regressive? I would argue that it is incredibly pioneering.96
Revenue raised by a tax
83.Those campaigning for the introduction of a tax on sugar-sweetened drinks have estimated that it could raise between £300 million and £1 billion per year.97 Malcolm Clark of the Children’s Food Campaign suggested that the revenue-raising potential was a key reason for widening support for a tax.98 Witnesses who supported a tax on sugar-sweetened drinks were also clear that the revenue raised should be hypothecated and spent on measures to improve public health, where it could make a significant difference. For example, Jamie Oliver argued that half of the revenue raised should be channelled towards NHS treatment for people who are suffering from diet-related disease, and the other half to primary schools. He suggested that from that, a grant of £20,000 to each primary school would make a significant difference to promoting healthy eating projects within those schools.99
A tax on full sugar soft drinks as part of a wider set of measures
84.Our witnesses were clear that the introduction of a tax on sugar sweetened drinks will not be sufficient of itself to tackle childhood obesity.100 We heard a clear consensus from our witnesses that there is no ‘silver bullet’ for tackling obesity, and that a wide variety of measures—including, but not limited to, those recommended by PHE to reduce sugar consumption—need to be introduced simultaneously, each having a small impact, but contributing to a larger whole.101 The strategy should include as many of these measures as possible.
85.We were told that a tax on full sugar drinks has the advantage that it is a clearly defined, targeted policy.102 Unlike some of the other recommended measures, it could be introduced swiftly, and doing so is likely to lead to an immediate fall in sales. The impact on soft drink sales in Mexico was seen within the first year of its introduction. By contrast, broader interventions to reduce sugar levels in all high-sugar products may take longer—the salt reformulation programme, which has achieved reductions of 20–40% in many foods, has taken place over a ten year period.103 The 50% sugar reduction modelled by Public Health England is an ambitious target, and the evidence review states that “no assessment has been made of the feasibility” of achieving such a reduction.104 Equally, although reducing price promotions on unhealthy foods is clearly an area of great potential impact, our witnesses could not give us detail of how such a reduction could actually be implemented.
86.A tax on full sugar soft drinks is a limited measure targeted on specific and easily defined products. It may be that a broader tax on all high-sugar products would have a greater overall impact, but our witnesses argued that the strength of a tax on full sugar soft drinks lies in the fact that it is limited to a clearly defined category. Sugar-sweetened drinks have been identified by SACN and by Public Health England as an area where consumption should be ‘minimised’—for children aged 11–18, these drinks make up the largest proportion of their sugar consumption. A specific tax, limited to full sugar soft drinks, could therefore be considered a proportionate policy response to help children and their parents meet this advice. Public Health England also suggest that “some may prefer a tax on a specific product—such as sugar sweetened drinks—rather than more widely applied restrictions being made to price promotions and marketing as this would affect more products.”105 We also note the advantage of a tax on full sugar drinks that these are products for which it is always possible to use an artificial sweetener as a substitute. There would always therefore be alternative cheaper products not affected by the tax, which would prevent this measure being financially regressive if consumers switched to a healthier alternative.
Conclusion: a sugary drinks tax
87.The Scientific Advisory Committee on Nutrition has recommended that consumption of sugar sweetened drinks should be minimised. This is particularly important for children, as 29% of the sugar intake of 11–18 year olds comes from sugar-sweetened drinks, larger than any other population group. We therefore support Public Health England’s recommendation for a tax on full sugar soft drinks, and recommend that it be introduced at a rate of 20% to maximise its impact on purchasing and help to change behaviour.
88.Public Health England’s evidence review considered the potential of interventions to reduce sugar consumption across the board, rather than specifically focusing on the problem of childhood obesity. We fully endorse PHE’s recommendations on restrictions on price promotions, further controls on advertising, and reformulation, and we note that the potential for these recommendations to have a significant impact is derived from the fact that they are broad and universal—across all food groups—rather than targeting a single product group in the way that a tax on full sugar soft drinks does. However in our view, the narrow, targeted nature of a tax on full sugar soft drinks is one of its key strengths as a policy for tackling childhood obesity. There is, and always will be, a place within our diets for small amounts of ‘treat’ foods which are high in sugar. However, both the Scientific Advisory Commission on Nutrition and Public Health England have presented a clear case for minimising the consumption of sugar-sweetened drinks, particularly amongst children—in 11–18 year olds they make up 29% of sugar intake, higher than any other part of the population. We therefore consider that a tax on full sugar soft drinks is a proportionate policy response and also sends a clear message to parents and their children about the importance of reducing sugar consumption.
89.A tax also has the benefit of being revenue-raising. Public health budgets are being increasingly squeezed, restricting the ability of local authorities and schools to introduce measures to improve physical activity and to undertake other activities including education about healthy lifestyles.
90.There has been much debate about whether a tax on sugar sweetened drinks would be regressive, in disproportionately affecting low income families. We do not believe this needs to be the case because zero sugar alternatives are available which would be unaffected. There is compelling evidence of the disproportionate harm to disadvantaged children from high sugar products which can no longer be ignored. Nonetheless, given the concerns that the income raised by a tax could come disproportionately from lower income families, there is a strong case that those families should also derive the most benefit. A sugary drinks tax should act as a child health levy, with all proceeds directed to measures to improve children’s health. Those measures should be especially targeted to help the children who are at the greatest risk of harm from obesity.
91.The sugary drinks tax should be designed and introduced alongside an evaluation of its effectiveness. This should include specific consideration of its financial as well as health impact on different socio-economic groups. We also recommend a sunset clause so that if it becomes clear that it is not effective it can be withdrawn.
92.A sugary drinks tax is an essential part of a wider package of measures to tackle childhood obesity. We were told that action should be taken on all fronts, and that we no longer have the luxury of ‘picking and choosing’ between different actions, as it is clear that none of them will be sufficient on their own: introducing a tax on sugar sweetened drinks in Mexico has reportedly reduced consumption of these products by around 6%.106 Public Health England calculate that if all price promotions on high sugar products were ceased, sugar purchasing could reduce by 6%107. Equally Public Health England calculate that reducing the amount of sugar in key food groups by 50% could reduce children’s sugar consumption to around 11% of energy intake, but this is still more than twice the SACN guidelines.108
93.We believe that measures to tackle childhood obesity should be introduced as swiftly as possible. Reformulating products to reduce sugar levels by 50% will not happen overnight: the PHE review states that “no assessment has been made of the feasibility” of achieving this target. Equally, while the case for action on price promotions is clear, we have not seen specific proposals for how that should be implemented. By contrast, a tax on full sugar soft drinks is a clearly defined policy recommendation that can be simply and swiftly implemented, drawing on the lessons that can be learnt from international experience.
77 Sustain, Sugary Drinks Duty Supporters (accessed 20 November 2015)
78 “Introduce a tax on sugary drinks to improve our children’s health”, Petition to Parliament, Jamie Oliver (accessed 20 November 2015
79 Public Health England, Sugar Reduction – the evidence for action, October 2015, p8
80 Public Health England, Sugar Reduction – the evidence for action, October 2015, p23
81 Public Health England, Sugar Reduction – the evidence for action, October 2015, p23
82 Q175; Q177
83 Q186
84 Q59
85 Q177
86 Q180
87 Public Health England, Sugar Reduction – the evidence for action, October 2015, p25
88 Q56
89 Public Health England, Sugar Reduction – the evidence for action, October 2015, p25
90 Q57
91 Q182
92 Q60
93 Q182
94 Q185
95 Q14, Q43
96 Q140
97 Q15
98 Q15
99 Q131
100 Q184
101 Q244, Q130
102 Q175, Q202
103 Consensus Action on Salt and Health, Salt Reduction in the UK (accessed 20 November 2015)
104 Public Health England, Sugar Reduction: The evidence for action; Annexe 5: Food supply, October 2015, p8
105 Public Health England, Sugar Reduction – the evidence for action, October 2015, p41
106 Public Health England, Sugar Reduction – the evidence for action, October 2015, p23
107 Public Health England, Sugar Reduction – the evidence for action, October 2015, 24
108 Public Health England, Sugar Reduction: The evidence for action; Annexe 5: Food supply, October 2015, p9
© Parliamentary copyright 2015
Prepared 27 November 2015