Sugar tax could cut soft drink consumption, help halt growing obesity rates: Grattan Institute
Updated
A tax on sugar could cut soft drink consumption by 15 per cent and raise $500 million for the budget, recently released economic modelling shows.
Key points:
- Obesity costs taxpayers $5.3 billion annually, one in three Australians classed as obese
- A tax of 40 cents per 100 grams of sugar would lift the price of a two-litre bottle by about 80 cents
- Taxing soft drinks has shown to help cut rising obesity
The Grattan Institute has recommended a sugar sweetened beverage tax to address obesity rates, which have climbed in recent decades.
It has calculated obesity costs taxpayers $5.3 billion annually, with one in three Australians now classed as obese.
They are proposing a tax of 40 cents per 100 grams of sugar, which would lift the price of a two-litre bottle of soft drink by about 80 cents.
Stephen Duckett, director of the Institute's health program, said soft drinks were not solely responsible for the obesity problem, but they should be targeted because they have no nutritional value and children are big consumers.
"What we're trying to do is recognise that this is not the solution to obesity in this country, rather part of the solution," he said.
"We've tried all sorts of other programs, there's been dozens of inquiries, there's been dozens of programs and still obesity, the prevalence of obesity is going up both for adults and more importantly for children."
Evidence shows sugar taxes halt obesity
The food industry, sugar cane growers, sugar millers and farmers have opposed proposals for sugar taxes, saying there was no evidence they improve health.
But Dr Duckett said taxing soft drinks had shown to help cut rising obesity.
"There's been a number of studies of overseas countries where they've introduced taxes of this kind — Mexico, the city of Berkley in California and so on," he said.
"And what it shows is there is a shift away from sugar sweetened beverages towards tap water or mineral water or other beverages, and that reduces sugar intake.
"They've found that and have predicted a marginal reduction in obesity and in a sense a plateauing of the escalation prevalence in the country."
![Sugar tax graph Graph showing the impact of proposed sugar tax content tax on the retail prices of SSBs](http://web.archive.org./web/20161128143830im_/http://www.abc.net.au/news/image/8049156-3x2-700x467.jpg)
'Bonkers mad'
Deputy Prime Minister Barnaby Joyce has described a sugar tax as "bonkers mad" and a "moralistic tax" that would have huge impacts on sugar farmers in the north of Australia.
"If you want to deal with being overweight, here's a rough suggestion — stop eating so much and do a bit of exercise," he said.
The Greens have drafted legislation for a "sugar-sweetened beverages tax", foreshadowing a private senators bill to be introduced before the end of 2017.
"People are sitting on their backside too much, and eating too much food and not just soft drinks, eating too many chips and other food," Mr Joyce said.
Impact of tax on industry 'would be minimal'
Dr Duckett said the tax modelled would raise $500 million for the budget, by targeting only those who consumed soft drinks.
"Certainly the tax is regressive, but it's important to recognise that it's only very marginally regressive," he said.
"That is the total spending of a household on all beverages — not only sugar sweetened — is less than .75 per cent of their household income, and for wealthier households it's .45 per cent.
"So there is a regressive effect, but it's such a small proportion of household income that it's not really significant."
The Grattan Institute report said industry data showed the soft drink industry was worth more than $3 billion a year in revenue.
Dr Duckett believes industry have overestimated the impact of a sugar tax.
"If you look at the Australian sugar industry, 80 per cent of Australian sugar is exported and when you look at the remainder, there's a lot of sugar used in other sorts of food and drinks," he said.
"So the impact of our change is going to be very small on the sugar industry.
"In terms of the impact on the beverage industry, I don't know the relative profitability of say Coca-Cola versus Mount Franklin mineral water, but the same company owns both brands.
"So there might be a shift from Coke to Mount Franklin that may change the profitability — it may improve the profitability."
Topics: sugar, obesity, health, tax, government-and-politics, doctors-and-medical-professionals, australia
First posted