Taxing Sugary Drinks is a ‘Win for Health and Government Revenue’
South Africans campaign in favour of a tax on sugary drinks in 2017

Taxing sugary drinks can be a win for health and government revenue, according to the World Health Organization (WHO) at the launch of its first ever tax manual for sugar-sweetened beverages (SSB) on Tuesday.

“SSBs have little to no added nutritional value, but their consumption is significantly associated with tooth decay, weight gain and obesity, metabolic conditions and other diet-related non-communicable diseases,” said Dr Rudiger Krech, the WHO’s director of health promotion.

As food prices were a key determinant of food purchases, taxes on unhealthy products had proven to be a deterrent, he added.

Health promotion advocates have been critical of the WHO’s past failure to encourage SSB taxes, but the manual shows that the global body now embraces the strategy. 

“Raising taxes has proven to be the single most potent and most cost-effective strategy for reducing tobacco use, and similarly, we know that right raising taxes on alcohol beverages is also a potent and cost effective strategy for decreasing harmful use,” said Krech.

“This manual provides a practical guide to support an increasing number of policymakers from both health and finance perspectives that are contemplating the use of SSB taxation as the tool to effectively curb their consumption.

In South Africa, the mean daily sugar intake from taxed beverages fell by 37% after the introduction of a tax on sugary drinks in 2018, said Dr Francesco Branca, WHO’s nutrition director.

Last Friday, WHO launched a public consultation on its draft guidelines on fiscal policies to promote healthy diets, which strongly recommend a policy to tax SSBs, added Branca.

“The taxation of sugar-sweetened beverages is amongst the most cost-effective interventions recommended for prevention and control of non-communicable diseases,” he added.

At present, only a fraction of the WHO’s 194 member states tax sugary drinks. Eleven of the European region’s 53 countries do so, along with SSB tax pioneer Mexico, the UK, South Africa, Chile, Barbados and a handful of other countries.

The WHO’s Jeremias Paul, co-ordinator of the tobacco control economics unit, stressed that sugar has little or no nutritional value and the metabolic impact of liquid sugar was much worse than solids containing sugar as well as fibre.

“This manual essentially gives you a blow-by-blow, step-by-step way to build a case for SSB taxation,” said Paul.

“You need to determine the type of tax to impose, what are the taxable products or other or other words, what would be the coverage of products for SSBs? What will be the tax base, whether it’s going to be sugar content or the volume? What are the rates and tax administration capacity?” Paul added.

In Mexico, the government implemented an excise tax on beverages with added sugars, except for 100% fruit juices and beverages with artificial sweeteners. 

“Overall, we found reductions in purchases of taxed beverages and increases in untaxed beverages,” said said Arantxa Colchero from Mexico’s National Institute of Public Health.

“People substituted for bottled water mainly, and we found that the highest rate reductions were among low-income families, high consumers and households with children,” said Colchero.

There was no impact on employment for workers in the sugary drinks sector, either in the industry that produces SSBs nor the shops that sell the drinks, largely because the tax was “very small tax” of 5,3%, the shops sold SSB substitutes and industry also produces bottled water – the main product that consumers moved to, added Colchero.

Encouraging reformulation

UK’s Dr Victoria Targett from the Office of Health Improvement, said that her country’s tax was based on the sugar content per litre, and was  “designed to encourage reformulation” – a voluntary reduction in the sugar content of drinks by producers.

”And we have seen exactly that. In the most recent data that we published on 1 December, we saw that the levels of sugar in drinks that are subject to the levy have come down by 46%,” said Targett.

Dr Mpho Lekote from South Africa’s Treasury said that the introduction of what is termed a “health promotion levy” in his country was championed by Treasury, together with the department of health.

Although they initially proposed a 20% tax on sugary drinks, this was reduced to around 11%, with the first 4g of sugar per 100ml tax-free.

“South Africa has sugar cane growing segments, and there were concerns about the impact of the levy on the sugar cane growers,” said Lekgote, explaining why the tax had almost halved.

Revenue from the tax has dropped as producers have reformulated their drinks, he added.

Image Credits: Heala_SA/Twitter, Kerry Cullinan.

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