Sugar tax: ‘Do Something’ Economics 101

Matthew O’Donnell

13 April 2018 | Ideas@TheCentre

The UK’s recent implementation of a sugar tax has reignited the push for an Australian sugar tax, pointing to ‘science’. Often, our scientific and political elites really have no idea what they are doing. But in spite of this, they believe that they should do something.

Rising obesity is a real observable problem but the scientific community hasn’t conclusively identified what the main cause is. Is it too many carbohydrates, too much fatty food, not enough exercise or increased depression? A convenient villain is sugar, hence many in the health lobby have called for punitive taxes on sugar-based soft drinks.

Unfortunately the evidence does not support the case that soft drinks and sugar consumption are major contributors to rising obesity. A contributor, definitely, but not the main culprit.

If sugar is the primary villain shouldn’t its consumption be going up as obesity does? However, while the prevalence of obesity has increased three-fold in Australians since 1980, per capita consumption of refined sugar decreased by 23% from 1980 to 2003.

Further, over the last 15 years there has been a 26% decrease in the per-person sugar contribution from carbonated soft drinks as consumers have replaced regular sugar-based beverages in their shopping trolleys with diet and zero sugar alternatives.

Even if sugar is the right target, why confine the tax to soft drinks? As far as discretionary foods are concerned soft drinks (4%) are ranked seventh on top of the high calorie pops, well behind confectionery/ chocolate (18%), sweet biscuits (13%), alcoholic beverages (13%), burgers/pizzas/tacos (7%), pastries (6%) and fried potatoes/crisps (5%).

Obesity reduces longevity, quality of life, and — in a world of socialised healthcare — hurts taxpayers. A new soft drink tax might salve the conscious of the moral crusaders but it won’t fix this obesity problem. The medical lobby might cry that something must be done. But for a change, let’s have our politicians do nothing until we have a credible, evidence based solution.

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