Tax idea leaves us sour

Dr Eric Crampton
The Dominion Post
14 March, 2018

To begin with, sugar taxes are offensive. They presume that some government official knows better than you about what food choices are best for you.

And when we think about how they're generally aimed at things like soda rather than expensive coffee drinks, they're also deeply classist.

They presume poor people are too dumb to make the 'right' choices and must be guided by their betters.

But even if you were OK with that, there's another problem.

Sugar taxes of 10 or 20 per cent – the range usually advocated – simply do not affect consumption very much.

Everybody talks about how tobacco taxes have cut tobacco consumption, but let's be realistic.

The tax on a single cigarette stick is $0.83. The cheapest cigarettes I can find online are Easy Reds, at $19.90 for a pack of 20.

Each of those then has 17 cents of tobacco, and 83 cents of excise. That isn't a 10 or 20 per cent tax.

The tax is almost five times the price of the tobacco. It's the equivalent of a 488 per cent tax.

Even if the government taxed sugar as heavily as it taxes tobacco, there is still another problem.

Until vaping, if you wanted nicotine, you had to buy cigarettes.

But there are all kinds of tasty and potentially unhealthy things out there that people could shift to if there were a tax on sugar.

The effects of tax on health would then be much smaller than you might think from a naive estimation from any reduction in sugar consumption. If people flip from chocolate bars to crisps, are they really that much healthier?

Unsurprisingly, in the real world, sugar taxes have not done much to improve health.

But don't just take my word for it.

The Ministry of Health commissioned the NZIER (New Zealand Institute of Economic Research) to review the literature on sugar taxes around the world.

NZIER found little effect of sugar taxes on consumption, and no evidence of health benefits.

And documents released to the New Zealand Initiative by the Ministry of Health showed that the ministry had reached a very similar conclusion about sugar taxes, advising the minister that there is "insufficient evidence that a sugar tax would be effective in reducing obesity".

The ministry also warned that the quality of evidence presented in favour of sugar taxes "is a major concern".

All of that means that, even if sugar taxes were easy to implement (and they are far from easy to implement), there would still be no good reason to do it.

It is time that public health activists simply admitted that they got this one wrong and left us alone.

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