Is the sugar tax an effective public health initiative?
As background knowledge, the science is pretty clear.
Excessive sugar consumption is a major problem in many Western countries. This is linked to a rise in many chronic conditions such as Type II diabetes, obesity, tooth decay and hypertension (high blood pressure).
The sugar tax was proposed by public health experts as a way to combat this problem. Introduction of taxes artificially raises the prices of sugary products (especially soft drinks) in order to reduce consumption and health risks at population level, as customers are extremely sensitive to changes in product price.
This is a public health strategy known as primary prevention. If we reduce the incidence of secondary, sugar-associated conditions, this means that the national health system would spend fewer resources on treating patients in the long-run. Not only would this cut down medicated time involving hospital specialists and general practitioners, many more individuals would improve their quality of life, which is the main expected outcome.
Another advantage that has been brought forward is that consumption taxes will likely raise significant revenues for the government. These funds can then be reallocated to other public services or health departments, or even reducing other forms of tax.
There is also precedent for a similar type of intervention for “demerit goods”. Sugary drinks falls into this economic category because it is consumed without full knowledge of the negative health effects associated with it, and is accelerated by its addictive counterparts. It is likely to be over-consumed and therefore overproduced if the market is left alone. Consumption taxes have previously been added to sales of cigarettes and alcohol and resulted in better health outcomes, therefore it is not a radical change to propose.
By introducing artificial inflation on prices of sugary and unhealthy products, health systems incentivize big businesses to innovate and reformulate their products with healthier ingredients. Companies must do this to maximize their profit margins.
At the very least, we would end up with products that would “appear” healthier on paper. Companies have reduced the amount of sugar on many products when this health intervention was first introduced, but resorted to using fats and artificial sweeteners to keep their products addictive and palatable to consume. These effects come with health problems of their own, which would be an opportunity for future policy research studies.
Perhaps the biggest objection to sugar taxes is that they disproportionately impact people with lower-income status. Consumption taxes automatically raise the price of goods and services, and they must therefore spend more of their total income to buy products. These adverse effects are further seen in cases where people would purchase sugary products regardless of the higher price, due to the fact that they are highly addictive. This intervention simply takes more from those with less — without actually achieving the initial goal of lowering consumption of these products.
Furthermore, these chronic health problems we are aiming to prevent (obesity, high blood pressure, diabetes, tooth decay) are highly complex and often multifactorial. Sugary products are likely just one source of problems and it is unlikely that reducing consumption of them will eliminate these large-scale issues.
Health campaigns like these can also be often seen to unfairly discriminate against certain groups in society, even if this is completely unintentional. It is not necessarily unhealthy for someone to have a high BMI or to be categorized as “obese”.
As with any other large-scale public health intervention, the economic impact should also be largely considered. Public health spending and consequences do not exist in a vacuum; they exist with all other social spending initiatives which are subject to the same market forces. If health campaigns cause significant strain on commercial industries, any excess costs are likely to be passed on to consumers and employees. This would imply: new R&D staff, new marketing strategies, new product reformulation, leading to increased end-cost to the consumer, lower wages, and fewer jobs (or a combination of all three — yikes!).
Therefore, it is worth reflecting on whether or not public health bodies have the right to decide what products consumers are able to buy or intervene in business markets. Based on medical ethics and principles, public health campaigns like these fundamentally rely on restricting the consumer autonomy to spend money on what they want, in order to achieve a health benefit later. Some might argue that this would be a heavy degree of paternalism. Health economists play a significant, decision-making role in analyzing the best value of health interventions for the majority of the given population in both short and long term periods.