The lunacy of an effective Sugar Tax that would mean wine is cheaper than Coke

The health troughers pushing for sugar taxes are cutting their own throats with dopey thinking.

Their silly statements are easily picked apart as Robin Grieve shows.

The Government has for now turned down the opportunity to increase its revenue and tax us when we buy a sugary drink, despite persistent calls for it to do so and quite strong public support for a tax.

This public support will mean it is an issue that will not go away.

Yeah and given John Key’s penchant for political somersaults this one is fraught with danger.

It is the opinions of those in the middle, who are not strongly liberal or socialist that are more likely to influence a government. It is presumed that their views are considered and informed and reflect the merits of a particular idea rather than a philosophical bent. The problem I see is that for their views to be considered and informed they need information which so far has not been forthcoming.

Tax proponents seem to think none of this matters because they argue that taxing something automatically reduces consumption, but is that really the case?

The tobacco tax is used as an example of where tax has reduced consumption. A packet of cigarettes has a $16 tax put on it raising the price from $4 to $20 and it certainly has had a chilling effect on consumption. Taking a 600ml bottle of fizzy, which at my service station is currently $4.10, to $20.10 would definitely reduce consumption of that drink and at the same time add fizzy drink to the list of things only rich kids can enjoy, thereby increasing inequality. I don’t see how that is even remotely fair and just.

With tobacco there is no substitution. Also only smokers pay tobacco taxes. With sugar taxes everyone pays…and pays…and pays. They pay whether they are a fatty or someone with the body of a half sucked throatie.

The other problem with such a hefty tax is that people could start making their own at home. It will be a lot cheaper than anything they buy now so consumption of sugar could skyrocket.

Britain introduced a tax of 17 cents for a standard sugary drink and it is very hard to see how this is going to make any difference to obesity at all. Firstly there is no guarantee the price of the drink will change. Manufactures might absorb the cost or spread it over other products.

The next question is if the price increases to the consumer what impact will that have? If the can of fizzy gets expensive enough to make a difference, that is great when the difference is the purchase of less pop but that is not the only possibility. A 20c increase in a bottle of fizzy could be one less apple in the shopping basket.

Shoppers could opt for the supermarket option where the drinks are usually around half the price than at a dairy. Buying them twenty at a time to save money will then result in an increase in consumption. Likewise shoppers might seek value in the 2 litre over the 600 ml, again increasing consumption. And as I said before they could always make their own and really heap the sugar in to it.

So sin taxes can have the opposite effect and increase consumption.

Manufacturers would simply spread the sugar tax over all their products, add on a labelling price increase and actually make more money.

One point tax proponents make is that taxes work because there was a reduction in Mexico when it introduced a tax and that while the tax is not a total solution the benefit is that it gives a signal from the government and people then consume less. Well I agree with this.

In researching this I measured how much sugar is in a can of fizzy and I was shocked. I had no idea and while I don’t drink much these days and it is more often than not with ice and a rum I will probably reduce my intake now that I am aware. But I bet the 5000 parents of children with rotten teeth won’t, nor those who don’t care about their child’s sugar consumption.

Just because consumption reduces it does not mean obesity reduces. Most people drink fizzy without getting fat or losing their teeth. All a reduction in total consumption could mean is that the already responsible people are drinking less. The rest just carry on.

Whether a tax will even change the price of sugary drinks and what effect it will have on sugar consumption is not known. It is too simplistic to say that a tax is a good idea because it will raise the price and that in turn will reduce consumption and obesity. It is also too simplistic to ignore the possibility that it could do more harm than good and increase consumption.

A sugar tax won’t make a blind bit of difference to obesity levels. It is ludicrous to compare tobacco with sugar.

 

– NZ Herald

 


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  • Genevieve

    Have the health troughers considered that a sugar tax could see the sales of Soda Streams increase markedly, in order for sugar ‘addicts’ to make their fix at home.
    Increased sales for an Israeli company would surely irk some of them. Personally, I’d prefer to call it an ironic case of cause and effect.

    • Observer

      It seems that people switch to fruit juice.

      “RESULTS:

      Nine articles met the criteria for the meta-analysis. Six were from the USA and one each from Mexico, Brazil and France. All showed negative own-price elasticity, which means that higher prices are associated with a lower demand for SSBs. Pooled own price-elasticity was -1.299 (95% CI: -1.089 – -1.509). Four articles reported cross-price elasticities, three from the USA and one from Mexico; higher prices for SSBs were associated with an increased demand for alternative beverages such as fruit juice (0.388, 95% CI: 0.009 – 0.767) and milk (0.129, 95% CI: -0.085 – 0.342), and a reduced demand for diet drinks (-0.423, 95% CI: -0.628 – -1.219). Six articles from the USA showed that a higher price could also lead to a decrease in BMI, and decrease the prevalence of overweight and obesity.”

      Evidence that a tax on sugar sweetened beverages reduces the obesity rate: a meta-analysis.
      BMC Public Health. 2013 Nov 13;13:1072. doi: 10.1186/1471-2458-13-1072.

      • Kevin

        Fruit juice is almost as bad as fizzy drinks.

  • Terry

    “No one has even suggested a rate at which the tax should be levied. Without knowing what rate of tax will be imposed no one can know how consumers will react and what effect it will have on consumption and therefore if it is a good idea or not.”

    Don’t worry about the RATE! Worry about the HOW and the WHERE such a tax would be imposed? At point of production – like the excise on alcohol drinks? OK, on what drinks and what levels of sugar content? At point of sale? Chaos.

    Why not look at the regulations relative to fruit JUICES and distinct from fruit DRINKS, and impose a regulation governing maximum added sugar content.

    That is, if it’s really the problem it’s cracked up to be by the do-gooders.

    • OneTrack

      Except, when it gets right down to it, they don’t care about sugar. They just want to tax the big American company ie Coke.

  • Clutch Cargo

    What the pointy heads fail to grasp is peoples lives are like a ballon. Squeeze it in one place and it will bulge out in another. Taxes and restrictions are just like that and people are infinitely creative when it comes squeezes and bulges.

  • andrewo

    Wine cheaper than coke!
    Have I died and gone to heaven?

    • OneTrack

      Don’t get carried away. Eventually someone in Labour will find out that their are sugars in alcohol which must be taxed too.

      • RightyTighty LeftyLoosey

        Correct. Same with the falsely labelled healthy breakfast cereals that have huge amounts of sugar in them.

  • Tracy

    All this pontificating about a sugar tax, it seems no one has actually put any logical thought into how or at what stage of the process it will work. Raw materials – that means my home baking costs increase. Point of Sale? If the tax is only a few cents it is not really going to be a deterrent, the best that we could hope is that the few cents is used for research to help combat obesity by educating people – oh wait, that would lead to an expectation of personal responsibility.

    • OneTrack

      Details on how it would work? That is not the NZ Labour Party way.

  • JustanObserver

    “Manufactures might absorb the cost or spread it over other products”
    I can be pretty sure that my ‘Vice’ of Diet-Coke will not be unaffected regardless that it has 0% sugar …

  • Observer

    ***Britain introduced a tax of 17 cents for a standard sugary drink and it is very hard to see how this is going to make any difference to obesity at all.***

    At least some of the costs to the health system are passed onto the manufacturer though?

    ***But I bet the 5000 parents of children with rotten teeth won’t, nor those who don’t care about their child’s sugar consumption.****

    Indeed, but so what. At least this would move some of the financial costs (borne by public health systems which taxpayers support) gets moved to the manufacturers.

    • OneTrack

      The financial costs will be moved on to the consumers. They pay the tax.

      • Observer

        My impression is that the people who tend to feed their kids high quantities of soft drink & have obesity issues are relatively low income earners and don’t contribute much in tax.

  • RightyTighty LeftyLoosey

    I am currently sitting at my desk in an industrial part of Auckland looking at 4 Pacific Islanders eating their lunch at the factory across the street. 3 of them are sipping out of 1.5ltr Coke and Fanta bottles whilst also smoking. These people are grossly obese and will suck up many health dollars in the years to come. Is it fair that we have to pay for their healthcare? The tobacco is taxed so why not the sugary drinks??

    • OneTrack

      What else are they eating? Pies? Chips? Buns?

      Of course it’s only the drink manufactured by the big American company that has to be taxed.

      • Observer

        They’re not mutually exclusive. The fact that you could tax those items, doesn’t address whether it might a) reduce consumption of sugary drinks and b) transfer some of the the financial burden to the manufacturers.

      • RightyTighty LeftyLoosey

        You are off course absolutely right. But, how else do you slow the excessive empty calorie consumption? That drink will have more calories than the food they are consuming. Why could they not have water instead?
        I agree that a sugar tax on sugary drinks is not ideal or fair. I don’t really like sugary drinks but do like alcohol. Is it fair that I get taxed on alcohol?

    • Observer

      Agree entirely.

    • Doug

      How is the weather there, up on your high horse?

      These guys are working, it means they are paying tax. Overseas you can buy cigarettes for about nz $4, here they cost $20, would you have a guess how much tax is in that? If these things are all so bad for them, I doubt they will collect much pension, as they should be dead either, before or close after turning 65.
      They have paid their way, and some. How about we let them make their own decisions seeing as they are working and contributing to society. If you are really that keen on creating a healthy society, teach their children healthy eating

      • RightyTighty LeftyLoosey

        Unsure of what high horse you speak off.
        Yes, they are working and paying tax but to say that “they have paid their way and some” is plain dumb.
        Have you heard of “working for families”??? Some “Tax payers” get more back in working for families and housing subsidies then they pay in tax.

        • Doug

          Back on it I see… So what makes you say they are receiving working for families?

  • Superman

    Wouldn’t it be wonderful if the price of Coke went up and of wine went down. When the Prime Minister is told the people are fat he can say “Give the people wine”. We can only dream.

  • Kevin

    It’s the equivalent of a scud missile attack: total ineffective, more than likely to completely miss it’s target, and will just end up harming innocent people (consumers).

    I know from personal experience that fizzy drinks put on the weight. So I don’t have it home and just have it when I’m out. More expensive but it means I drink a lot less of it. Self-discipline and personal responsibility – no need for taxes and government busy-bodies. Simple.

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