Tuesday, March 11, 2014

The Sugar Tax - Yes or No?

The idea of a Sugar Tax is being suggested by Sally Davies, England's chief medical officer.

I raised this in 1996 in my book Bills of Health, and put it to Green Party Conference. It was rejected, by the Handbrake Tendency, on grounds that it would put up the price of home made jam.

Sugar tax is a Pigovian tax that puts up the cost of an item that you want people to use less of. The item becomes more expensive, so people will buy less of it. The proceeds of the tax should be directed (hypothecated) to making better alternatives cheaper. Pigovian taxes are already applied to tobacco, alcohol and oil, although the hypothecation aspect is not well done. 

The problem is that when an item is addictive (as is the case for tobacco, alcohol, oil and sugar) the demand goes down for a short time each time the tax is increased, then bounces back as the addiction re-asserts itself. This is fine from the Treasury point of view, because the tax revenue keeps rolling in, but addiction trumps the idea that putting up the cost alone will solve the problem.

Therefore the tax has to be part of a more comprehensive and holistic treatment of the problem. The tax should remain, its proceeds should be hypothecated (directed) to remediation of the problems it causes, but other measures should also be applied. Carbon taxes should go to support public transport, energy conservation and renewables. Nicotine taxes must go to supporting nicotine addiction treatments, respiratory medicine, and the cost of the fire service. Sugar taxes should be hypothecated to NHS dentistry services, and to making healthy foods cheaper. This is the application of the Polluter Pays principle, which is one of the central elements of green economics.

Corporations that produce addictive products will of course resist any attempt to reduce demand for their product.

The tobacco barons held up the campaign by the medical profession to put health warnings on tobacco by about 20 years.

Only last year the alcohol producers bought off the Tories from introducing minimum alcohol pricing.

The coal, oil and gas corporations are of course waging a highly successful campaign against the findings of climate science.

As for the sugar corporations, they are playing a blinder.

The only battle that the sugar giants have lost is to the dentists. Sugar causes dental caries. Fact.

Sugar probably causes obesity, Type 2 diabetes, strokes, coronary heart disease and some behaviour disorders. But the causality is hotly disputed by the corporations, their paid spokesmen, and by people who have been unknowingly influenced by their propaganda. Some of the proceeds of the tax should go to pay for research into these effects. Why should the corporations get the profits, while publicly funded  research should have to scurry around to find what the effects are?

There is a fair amount of research into the behavioral effects of sugar taxes, mainly centering aroud "soda" - sugary soft drinks. As is always the case with health and economics related research, results vary, but there is an emerging picture that substantial price increases will cause reduced consumption. An 18% tax was found to reduce intake by 56 calories a day, which should cause a 2kg/yr weight loss among the population. Not bad.

It is supposed that product substitution would mean that people would take less taxed "soda" drinks, but might switch to sweet milky drinks and fatty foods. Therefore the sugar tax should happen in parallel with a fat tax, and measures to reduce car dependency and stimulate walking and cycling.

The key card played by the sugar corporations is that it would put up the price of food chosen by people on low incomes, which would be "unfair". As if they cared. This line has been swallowed uncritically by some on the Left, including the Browns (=red/greens) in the Green Party. I had a brisk debate about this a couple of days ago on Twitter with a person who is recent addition to the ranks of the Green Party who has quickly risen to a position of influence. The conversation is here.

He argues that sugar tax is regressive - bears more heavily on the poor - and therefore that it is unacceptable. He accepts though that subsidies should be removed from sugar. This would increase the price of sugar to the poor to some extent, but not by enough to be effective. He would prefer to command the sugar companies to introduce less sugar into the UK market, which would be great if we had a command economy, but we do not. So until the UK becomes a command economy, the Browns in the Green Party will ally themselves with the fat cats in the sugar corporations, defending the right of the masses to live in unemployed poverty and console themselves with sugary drinks until their teeth rot, until they can barely waddle to the table to get their diabetic medication, and until their misery is relieved by an early death.


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