The Price of a Sugar Tax
Just before Brexit made newspaper headlines, Britain’s media was carefully eyeing the tough talk that George Osborne was delivering to soft drink manufacturers when he placed a tax on sugary drinks at the centre of his 2016 Budget.
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The new tax could see the average price of a 330ml fizzy drink increase by S$1.40.
At one end of the arena, celebrity chef Jamie Oliver gave a thumbs up. Well, actually he did a dance in front of the parliament in Westminster and accidentally got on TV when BBC News was doing a live coverage of the Budget.
At the other corner of the arena, we see battle-weary soft drink companies dusting off the old PR notes once again. Coca-Cola’s UK boss, Leendert den Hollander protested, “There is no evidence to suggest this will reduce obesity.”
A typical fizzy drink contains about 9 teaspoons of sugar. The maximum amount of added sugars per day for adults, as recommended by the American Heart Association, is 9 teaspoons for men and 6 for women.
With a two-tier tax rate (for drinks containing more than 5g of sugar per 100ml; and a higher rate for those above 8g per 100ml), Osborne is telling manufacturers in a delightfully passive aggressive manner to reformulate their recipes to cut sugar levels.
However, the Americans are way ahead in gaming the system.
Instead of going back to the recipe drawing board, Coca-Cola U.S. pushed for mini-cans which, they boast, “contain fewer calories”. While this argument is (painful to admit) mathematically sound, it does not get to the bottom of the issue: people consuming high-sugar drinks.
To add icing on the cake, the “Share-a-Coke” campaign, which printed popular names on its cans, was so popular that a million mini-cans were distributed in 2014. Better yet for Coca-Cola, these little cans cost people more than double per ounce of drink. It’s no wonder public health officials are up in arms.
If people are willing to pay more for less soda, Osborne needs a tougher strategy.
Not a tax: In France, a soft drink tax of about S$0.70 per 330ml saw little impact once shoppers got used to the new higher prices. A ban also seems unlikely to take off; given that New York tried and failed to prohibit the sale of sodas bigger than 16 ounces (so welcome back, 7-Eleven Big Gulp). The solution is to raise public awareness on the evil of too much sugar. Yes, yes, roll your eyes. It is not a new strategy, but one arduously difficult to put into practice.
Today, the Health Promotion Board puts the Healthier Choice Symbol on 2,500 food products spread over 70 food categories. Associate Professor Daniel Goh, a non-constituency MP, suggested in parliament to implement a colour-coding system on sugar content in processed foods.
On the ground, public opinion on measures to cut sugar varies – though anything would be better than a sugar tax.
Singaporeans would already know one way to game the system anyway— In the words of Professor Phua Kai Hong, who teaches health and social policy at Lee Kuan Yew School of Public Policy: “If you impose the tax here, what about people going over to Malaysia to consume sugar?”