The Taxpayers' Union's new report The Bitter Truth: Why don't sugar taxes work? focuses on the regressive economic effects of sugar taxes and responds to the central claim from public health lobbyists that sugar taxes will improve health outcomes.
Whatever the good intentions the evidence shows that unfortunately sugar taxes haven’t actually worked to curb obesity where they have been tried. They fail to deliver meaningful health outcomes, but consumers still get hurt by the tax – especially low-income households who are disproportionately punished. Promoters of these taxes claim that the small health benefits are progressive, but the evidence for this is at best mixed.
There is also no evidence for the existence of a market failure that would justify intervention. Just because you might find someone else’s behaviour distasteful does not mean the market has failed. Many people simply enjoy drinking sugar-sweetened beverages and are fully aware of any health consequences.
The health lobbyists that campaign for sugar taxes have good intentions but they need to pay attention to the evidence. Good public policy requires a sound evidence-based approach and we hope this report goes some way to promote that.
- Many sugar tax studies fail to take into account the effects of quality substitution and storability. Each of these effects markedly reduce the effectiveness of sugar taxes in achieving health outcomes.
- When quality substitution is taken into account, a 12-14% percent tax applied to SSBs could elicit an average weight loss of between just 200 and 300 grams per person. This is too small to provide meaningful health benefits.
- Economic evidence unequivocally finds that sugar taxes are regressive. Backholer et al. (2016) "reinforces the regressive financial nature of an SSB tax".