The Decibel - Do sugar taxes work?

Episode Date: August 30, 2022

As of Sept. 1, sugar sweetened beverages like pops, iced teas and energy drinks in Newfoundland and Labrador will be a bit more expensive. The province is bringing in a sugar tax, and it is controversial. The government says the goal is to make its residents healthier, as the province has some of the highest rates of diabetes and obesity in the country. Opponents say that the tax will only impact the poorest in the province or won’t make a substantial difference.Dr. Yann Le Bodo is a research fellow with the French School of Public Health, and he’s part of an international consortium of researchers looking into whether sugar taxes are effective or not. He tells us what the research is saying about sugar taxes and whether they actually lead to a healthier population.

Hi, I'm Mainika Raman-Wilms, and you're listening to The Decibel, from The Globe and Mail. We have set a plan for this province to be one of the healthiest in the country by 2030. That's Newfoundland and Labrador's Minister of Finance, Siobhan Cody, speaking in the House of Assembly earlier this summer. This particular sitting got a little heated. One of the ways that we are doing that is by the physical activity tax credit. We are also implementing it. Order please.

They're arguing about a sugar tax. Newfoundland and Labrador is bringing in a tax on sugar-sweetened beverages, starting on September 1st, later this week. It will tax 20 cents per litre on things like energy drinks, iced teas, and, of course, pop. Which includes the province's beloved pineapple crush. like energy drinks, iced teas, and, of course, pop, which includes the province's beloved pineapple crush. The government says the goal is to reduce the amount of sugar people are consuming to help make the population healthier, and that the millions they plan on collecting from the tax will be put towards school food programs, active living initiatives, and helping

seniors. Newfoundland and Labrador has some of the highest levels of obesity and diabetes in the country. But the move of a sugar tax has a lot of critics. If the minister was truly interested in healthy choices, she'd reduce the cost of healthy food, not increase the cost of living, which is exactly what... Newfoundland and Labrador is going ahead with the tax, despite opposition. And they're joining a long list of countries

and jurisdictions around the world that have this type of tax. It's not the magic bullet, but it's something that can contribute positively to the evolution of dietary behaviors alongside other interventions. Dr. Yann Loboto is a research fellow with the French School of Public Health. Yann is part of an international consortium of researchers looking into whether sugar taxes are effective or not. He's here to walk us through what the research is saying about sugar taxes,

whether they translate to people being healthier, and what other measures need to be in place to help us lead healthy lives. This is The Decibel. Thank you. How much of these sugar-sweetened beverages, pop, sweet juices, iced teas, that kind of thing, how much of these beverages are people actually drinking? If we look at sugary drink sales data, keeping in mind that sales data can differ from reported consumption, what we observe is generally a downward trend in Western Europe and North America. But sales per capita remains high in some countries, including Canada. So for example, if you look at the year 2015, sales were the highest in Mexico with about 147 liters per capita, which is about 40 centiliters per day. And then you have Chile that is close to this figure and the US with 126 liters per capita. But Canada is also among the countries where sales remain high with 88 liters per capita, which is about 25 centiliters per day.

Can you break those numbers down a little bit for me, Jan? I think let's look at that Canadian number that you talked about there. How does that translate in terms of if we think of like a serving, right? Like a can of pop or a juice or an iced tea. What's the average if we can do it like on a per serving basis there? Yeah, on a per serving basis, if we look at, once again, sales data at the global level, it looks like about one serving of 20 centiliters per day. So 250 milliliters per day. So yeah, about a can of pop per day then.

Yeah, 250 milliliters would be like a glass. But of course, it can differ depending on age and other parameters that would make the average consumption higher, for instance, in teenagers and young adults, where it's known to be higher than that. And what is important to keep in mind is that one to two portions of sugar sweetened beverage per day can be actually enough to exceed the WHO limit without taking into account all the other sources of sugar in the diet. So why is this an issue? Why is drinking pop or other sugary drinks like sweet juices and things like that, why is that concerning? Well, there has been a significant body of evidence now associating the consumption of sugar-sweetened beverages with a number of health problems such

as tooth decay, weight gain, or type 2 diabetes. Sugar-sweetened beverages are also of low nutritive value, but at population level, we know as well that even if there are some downward trends in the consumption of sugar-sweetened beverages, it remains a top sugar source in the diet, including in Canada. So let's get into the idea of this sugar tax then. What exactly is a sugar tax? Well, the objective of sugar sweetened beverage tax can be mentioned on three aspects. First, the objective of the tax can be to raise price so that it can be a disincentive to buy the products and consume the products.

So essentially make the drink, the sugar-sweetened beverage, more expensive than ones that don't have as much sugar then, so people don't want to buy them as much? Yeah, if you consider that the tax would be shifted onto prices, then the price increase could be a disincentive to buy the product, absolutely. Another motivation can be to design the tax in such a way that the higher the sugar content of the drink, the higher the tax can be. And this could be more an incentive for industries to reformulate the product or to develop new products that are less sugary.

And another potential logic behind the tax would be to generate revenues that could be used and to be reinvested in health-related programs and interventions. So these are three different perspectives that can be actually pursued simultaneously, but it's quite important for policymakers to make clear what is the objective. How many countries or jurisdictions around the world actually have a sugar tax? Over the last 10 years, there has been now more than 50 jurisdictions at city, provincial or national level adopting sugar, sweet and beverage tax across the world. Okay, so significant. There's a number of countries that are kind of getting on board

with this idea. And I know you've been doing research into these sugar taxes. I'm curious how effective they've actually been so far, though. Globally, when the tax is implemented and shifted onto prices, it decreases demand. So we talk about price elasticity from these taxes implemented that is about minus 1.5, which means that generally from this taxes implemented across the world when there is an average of 10% increase in price you may have a 15% decrease in demand then we have all the results that are important to take into account such as potential substitution towards all

the beverages so this has to be quite well monitored and also what is important in terms of results is to see the demand decrease across all kinds of population groups, particularly in terms of incomes. Jan, I want to go back to something else that you mentioned a little bit earlier about kind of the substitution. Like if people are not going to buy the sugar sweetened beverages that have been taxed, I mean, couldn't they just substitute with something else that isn't necessarily good for them either? Isn't that kind of a potential result of this? and fruit juice. But the results across the literature are inconsistent so far. So that may be because people may, in some cases, replace them with tap water, or they may replace them with homemade drinks as well, which may be also sugary, or they may not replace them at all. So what we know so far from the diversity of studies available is that there is not a clear pattern of substitution

that has been put into evidence. But this is something that should be further researched in the future. Newfoundland and Labrador's tax will be 20 cents per liter of the sugary beverage. This approach is a little bit different than what France did when France has implemented its sugar tax, the revised version of the sugar tax in 2018. France did something a little bit different in their sugar tax. How does France's tax work? Yeah, so France is an interesting case because the first tax has been adopted in 2012.

It was one of the first countries where a sugary drink tax has been adopted. But at the time, the tax was flat and low, and its scope was not solely based on a nutritional criterion. Can I just ask you, so when you say the tax was flat and low, what do you mean by that? Yeah, well, the tax was about, it was an excess tax that was about 7.6 cents per liter, which is about two cents per can, which is considered to be quite low. That doesn't really change any consumer habits, two cents for a drink or not. Well, we observed a moderate decrease that was temporary, but actually it has been revised and modified in 2018. And the objective this time has been much more clearly oriented towards public health,

with all the revenue dedicated to the social security funding, which include the health care and social care expenses. And also a specificity of the tax of the French revision of the tax is that now the rate is linearly indexed on the sugar content of the drink, which means then the more sugary it is, the more taxed the beverage will be. If you consider a typical cola beverage in France, the rate of the tax would be twice as high for the new tax than it used to be after the first tax. So it's quite a clear increase. So what difference does it make to do the tax that way,

to base it on the amount of sugar in the drink? Well, the objective that was stated by the policymakers were clearly that the tax revision was made to stimulate the reformulation of the beverages, to make it less sugary, to make the industry lower the sugar in the recipes and to develop new options and healthier beverages that are less sugary. And has this actually worked in making companies and the industry at large kind of change their

formulas for their beverages? Well, for the Soyda Tax Research project that I'm coordinating in France currently, this is what we are looking at. It seems that there has been some reformulation after the tax was implemented, but we also saw that there were some reformulation that had started before. So the tax may accelerate something that was already happening. So this will be confirmed by our analysis. But in other countries where such design has been implemented, like in the UK or in Portugal, we have seen positive results, encouraging results. For instance, in the UK, where a tax on sugary drinks has been implemented since 2018, and with two threshold of sugar content above which the tax increases,

we've seen that sugar intakes from taxed beverages has reduced one year after implementation. So this is kind of interesting results that they have observed in the UK, of course, to be confirmed on the longer term. One of the biggest criticisms of sugar taxes is that it disproportionately impacts low-income consumers. Low-income consumers end up usually buying more sugary beverages. These are often cheaper beverages. So how do we prevent something like this from really just impacting low-income consumers more than the rest of society? Yeah, so you're right. It's a regular and

serious concern that should be considered. The fact that lower-income families may tend to consume more sugary drinks than other categories of incomes, and the fact as well that the share of their budget for food expenses may be higher as well makes a sugar sweetened beverage tax potentially regressive. You're right. But this should be put into perspective first because, of course, we may also consider the tax system as a whole with tax exemptions or tax returns that try to compensate and to mitigate specific tax that may be regressive like this sugar sweetened beverage tax. Another aspect as well is that

if high consumers of sugar sweetened beverages are more sensitive to price hikes, though the benefits that they will have from reducing their consumption will be more important in comparison to other income categories, which makes maybe the tax economically regressive, but progressive in terms of health benefits, provided that the tax actually make people change their consumption habits. But third, and not least, actually, if it's not the case, and if some people continue to consume as much sugar-sweetened beverages despite the tax, then we should also be concerned about how the revenue from the tax is invested. And what is recommended as well, including by the WHO, is that the revenue generated from the tax be here marked for initiatives and interventions that may in

priority benefits to these groups of population that are less advantaged. So this is also another aspect that should be taken into account. So I guess the big question here then is, does bringing in a sugar tax actually help make people healthier? Well, I think that dietary behaviors in general are really important drivers of non-communicable disease. And sugar has been particularly concerning, but we should consider all the factors as a whole. And so since sugar-sweetened beverage consumption is influenced at the individual level, but also at the environmental level, I think it's a mix of policy that should be put into place

to expect the larger benefits, which include, of course, education, awareness raising about the risk associated with overconsumption of these beverages, but also interventions that would come as a package, for instance, taxation, but also regulation of the marketing, also action about the availability of healthier options in a diversity of settings. So it's really about acting and using a diversity of policies so that the behaviors at the end will be influenced. I know one of the things that you've looked at in your study as well is public perception of these sugar taxes. What have you found makes people support the tax and what makes them oppose it? Well, it's true that taxes are generally not among the more well-perceived policy options.

But actually, when you also consider the use of the revenues that would be generated from the tax, it tends to increase the acceptability of those taxes. So for instance, if the acceptability of the tax is around 50%, you may gain 10 or 15 percentage points if the revenue from the tax are said to be allocated for programs that would make other foods cheaper, healthy food cheaper, or if the revenue is used for a health education program. So this is an important point often in acceptability survey data. Yeah, because you would think like, yes, you could tax something that's not as good, but couldn't you just make, as you say, healthier food cheaper

and kind of give the incentive in the other direction? Yeah, I think that it's important to present the tax as one policy among others. As I just mentioned, it's not the magic bullet, but it's something that can contribute positively to the evolution of dietary behaviors alongside other interventions. So it's important to present it like that. But indeed, you have a couple of jurisdictions across the world that have announced some earmarking of the tax revenue. The others have not.

And you have examples of tax earmarking for awareness-raising campaigns, for support to community initiatives, for instance, school gardening, kindergarten infrastructures, renovations. So I think that you have a couple of examples across the world of jurisdictions that have clearly earmarked the revenues for specific actions and that generally it increases the acceptability of the tax. So just lastly here, Jan, what do you think is in store for Newfoundland and Labrador bringing in this tax at this point in time? Based on international literature, if provided the tax is shifted onto price, we could reasonably expect a decrease in demand. And then also hopefully have some debate about how the revenues could be used also from this tax to support health-oriented initiatives. important also to monitor the benefits and also potential side effects, which could help to adjust

the tax over time, as actually what happened in France, where the first tax has been adjusted after some years with a clear public health objective, a slight adjustment in the design. And once again, we will need here as well in France evaluation to see if this second design of the tax provides positive results on the longer term. Jan, thank you so much for taking the time to speak with me today. You're welcome. That's it for today. I'm Maina Karaman-Wolmes. Our summer producer is Zahra Kozema. Our producers are Madeleine White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show.

Kasia Mihailovic is our senior producer, and Angela Pachenza is our executive editor. Thanks so much for listening, and I'll talk to you tomorrow.