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Sugar sweetened beverage tax for Australia - July 2018

Proposition 1: "The best economic policy instrument available to policy makers seeking to address obesity and related health issues in Australia is the introduction of a tax on sugar sweetened beverages (SSBs)."

Proposition 2: "The health and non-health benefits from a tax on SSBs are likely to outweigh the possible costs felt elsewhere in the economy."

Collaborator credits: we would like to thank Professor Emily Lancsar for her assistance in framing this poll question and for her expert overview of the results.

Overview of poll results by Professor Emily Lancsar

Emily Lancsar

Emily Lancsar

Australia and the international community are facing what is often referred to as an ‘obesity epidemic’.

More than one in four Australian adults are obese. Sixty four percent of adults and 27 percent of children aged 5-17 years are classified as overweight or obese.

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Proposition 1

NEP-Q31-Prop1 Chart Responses

NEP-Q31-Prop1 Chart Responses weighted

Proposition 2

NEP Q31 Prop2 Chart 1 Responses

NEPQ31-Prop2-Chart2-Responses


Responses (21)


 

Rachel Armstrong

1 - Disagree

2 - Uncertain (neither agree nor disagree)


 

Alison Booth

1 - Agree

2 - Agree

1 - Australia is one of the highest soft drink consuming countries in the world.  It also has a growing proportion of the population that is obese and suffering from diabetes and heart disease. Better  than taxing only soft drinks would be to tax companies according to the sugar content of their products – any products, not just soft drinks. So ideally one would tax not only soft drinks but also all sweets and confectionary.  Taxes  on sugar  are a great incentive for producers to reduce the sugar content of their products.  An argument  for taxing only sugary drinks is that they are easy to tax. It’s more complicated administratively to tax every sugary food, it is argued. However, I do not see why it is any more difficult to tax confectionary than it is to tax sugary drinks. The evidence from Mexico for example on the effects of taxing sugary drinks indicates that the policy is working. Britain has introduced the tax earlier this year. Australia should follow. If we have managed to tax successfully cigarettes, I don’t see why we shouldn’t tax sugary products since the health disadvantages  of sugar consumption are so well documented. Diabetes and heart disease are very costly both individually and to society and there is no doubt that sugar Is associated with these diseases.

2 - See previous comment


 

Lisa Cameron

1 - Agree

2 - Agree


 

Fabrizio Carmignani

1 - Uncertain (neither agree nor disagree)

2 - Agree

1 - It is difficult to say that the tax is the "best" available instrument. It is certainly an instrument that should be considered and used, but it is not a silver bullet and should probably be seen as part of a broader package of measures targeting consumption habits. So, while I am strongly in support of the introduction of the tax, I cannot equally strongly agree with the statement that the tax is the best instruments available.

2 - There is a voluminous empirical evidence suggesting that these taxes are effective in reducing obesity. On the other hand, this tax is probably regressive. In practice, given the weight of SSB in the consumption basket of individuals, the adverse effect on poorer individuals should be small and most likely recovered through improved health outcomes. Producers also claim that the tax would result in a loss of jobs due to reduced demand. I am not aware of specific estimates in this sense, but one could argue that if the expenditure is reallocated from SSBs to other products, then increased demand for these other products should also lead to increased labour demand, so that the net effect of the tax on total employment should be in the end negligible.


 

Bruce Chapman

1 - Agree

2 - Agree


 

Ken Clements

1 - Strongly disagree

2 - Strongly disagree


 

Deborah Cobb-Clark2

1 - Disagree

2 - Agree

1 - This would be one sensible policy option, but it is not clear that it is "best".


 

Lin Crase

1 - Strongly disagree

2 - Strongly disagree


 

Gigi Foster

1 - Disagree

2 - Disagree

1 - Obesity is mainly the result of psychological/mental problems, so a long-run strategy to address it needs to involve policies that improve the psychological/mental health of those at risk for obesity.  Policies that try to make the ambient environment less obesogenic (like the SSB tax, but also efforts to improve access to exercise infrastructure and healthy food options for the poor) are likely to be somewhat helpful, particularly for children for whom poor choices and the development of poor habits in childhood may have lasting impacts into adulthood, but they do not treat the root cause of obesity.  The root cause is much harder to influence through conventional economic policy.  Broadening the definition of economic policy, we might consider imposing requirements on day care programs or schools that receive public funding to embed interventions like self-positive programs, self-discipline training techniques, and local contests that elevate interpersonal support and community production.  Confining oneself to conventional economic policy, one could implement a fat tax - i.e., have all ATO offices install scales, and every taxpayer who falls under a certain threshold BMI (like 30) qualifies for assessment at a lower marginal tax rate, or gets a tax credit, or something - and if hefty enough and publicized enough i'd expect such a tax policy to shift weight, but something tells me that this approach wouldn't be particularly politically palatable.  It would also be regressive, as would virtually any economic policy measure that targets obesity, because obesity and income are strongly negatively associated.

2 - This is a margin call. The main benefits would probably be in terms of reductions in weight and dental cavities, which can be estimated with reference to recent evaluations of SSB taxes that have been imposed in other countries. The drawbacks of an SSB tax include that it is likely to be regressive, and that drink makers may switch to artificial sweeteners that come with their own negative health consequences.


 

john freebairn

1 - Disagree

2 - Disagree

1 - See below

2 - SSBs contribute only a portion of external and internality costs of excess consumption of sugar, other food products and lack of exercise. Better to tax sugar input to encourage changes in product mix, including sugar content per SSB, as well as consumption of SSB. For many consumers, at least a third and perhaps a half, with moderate consumption of SSB and other sugar products, and minimal to no external costs, a SSB causes a loss of consumer welfare. That is, product and consumer heterogeneity needs to be recognised in the tax design. Where inadequate information is a part of the market failure problem, education and provision of product information should be a component of the policy packages.


 

Paul Frijters

1 - Strongly disagree

2 - Uncertain (neither agree nor disagree)

1 - The 'best' instrument available is probably to take the notion of individual responsibility seriously and allow health insurance contributions to depend on BMI so as to give people real incentives to manage their own weight. More widely, tackling obesity will require a sea-change in culture whereby offering fatty and sugary snacks to others will be seen as 'unwanted micro-temptations', banned from meetings, conferences, parties, etc.. It will also require a new attitude to sports, away from the focus and admiration of elite sports towards mass-participation sports. A tax on sugar in drinks is easy to circumvent and is mainly window-dressing. There is more energy in un-taxed milk than regular fizzy drinks, so beware of what one is pushing people towards! The best one could say about a sugar tax is that it starts the conversation about cultural change. It is first and foremost though a tax.

2 - I expect this tax to have almost no effect on health at all. So its just about the distributional and tax revenue implications. As a tax, it seems a bit clumsy to me, leading to an inefficient re-labelling race as to what counts as a sugary drink. People will get their sugar hits via other means.


 

Lata Gangadharan

1 - Disagree

2 - Uncertain (neither agree nor disagree)

1 - Taxes dont seem to have had much of an impact in other countries where they have been tried. This could be due to the low elasticity of demand for soft drinks.  Taxes on soft drinks therefore may not proportionately affect the quantity of soft drinks consumed. Taxing soft drinks could also lead to perverse effects, such as a reallocation of resources towards goods and services that are worse in terms of the negative externalities they cause (for example, alcoholic beverages). Perhaps other policies would be better to consider: government advertising, subsidising healthier alternatives etc.

2 -


 

Geoffrey Kingston

1 - Agree

2 - Agree

1 - I agree that sugar confers negative externalities so that there is a Pigou-type case for taxing sweetened products.

2 - The list of chronic health problems from obesity is long and growing.


 

Tony Makin

1 - Agree

2 - Agree

1 - A tax on sugar would be akin to excises levied on other specific goods that create negative externalities, notably alcohol (accidents), tobacco (lung cancer) and fuel (pollution).  In the case of sugar, the externalities are obesity, diabetes and related health problems that reduce individuals’ quality of life and impose huge burdens on taxpayers via the public health system.

2 - Compared to other countries, Australia’s tax system relies excessively on taxing income rather than expenditure, and taxing sugar would help redress the imbalance albeit in a small way.


 

Warwick McKibbin

1 - Disagree

2 - Uncertain (neither agree nor disagree)


 

Douglas McTaggart

1 - Disagree

2 - Disagree

1 -

2 - SSBs are just one input into obese outcomes.  Not addressing obesity directly by other means will simply force substitutions.  Ultimately those hurt will be lower socio-economic groups who disproportionately bear the burden of obesity and who will disproportionately bear the cost, to little positive outcome.


 

Adrian Pagan

1 - Agree

2 - Agree

1 - Taxes are a flexible tool to change behaviour. They make it possible to change the trade-off consumers make in favour of 1) their future selves (reduction of present bias in consumption) and 2) society (reduction of the negative externalities obesity creates for the health system).

2 - It is a difficult question. Given the negative costs associated with an over consumption of sugar, I feel it is likely to be true. .


 

John Quiggin

1 - Disagree

2 - Uncertain (neither agree nor disagree)

1 - There are plenty of superior options such as promotion of sport/exercise for young people. Looking specifically at sweetened beverages, it would more equitable to subsidise sugar-free versions than to tax the sugary ones

2 -


 

Jeffrey Sheen

1 - Disagree

2 - Uncertain (neither agree nor disagree)


 

Hugh Sibly

1 - Disagree

2 - Uncertain (neither agree nor disagree)

1 - The question assumes government should be involved in people's private dietary choices. This assumption itself requires some justification, which might be imperfect health insurance markets (premiums cannot be made contingent on a person's dietary choices) or that people do not suffer the full cost of their poor dietary choices (unavoidable costs fall on family and health services). In this case a broad sugar tax is likely to be efficient. But a narrower tax on SSBs will be less efficient than a broad tax on sugar.

2 - If a tax is imposed on SSBs people may possibly substitute to less healthy alternatives.


 

Beth Webster

1 - Agree

2 - Strongly agree

1 - Saying 'best' may be too strong but the evidence is that prices do affect consumer behaviour, especially for products with immediate benefits such as a drink. We clearly have a health problem on our hands and few policies to date have reduced the problem.

2 - The list of chronic health problems from obesity is long and growing.