Would sweet tax leave a bitter taste?

 

THE FEASIBILITY of a “sugar tax on sugar sweetened drinks” is being considered by a Department of Health special action group on obesity in response to rising levels in Ireland which reflect the global epidemic.

More than 60 per cent of Irish adults and a quarter of five to 12 year olds are overweight, contributing to an increase in conditions from type 2 diabetes to heart disease and cancer.

Many health experts consider the move as key to tackling obesity while the drinks industry fears it would cost jobs.

“If one single area could make an impact on its own, it would be decreasing the amount of sugary drinks,” says Prof Donal

O’Shea, director of the weight management clinics at St Columcille’s and St Vincent’s hospitals.

He is particularly concerned about prevention in children. When people are already obese, it is a habit that is very hard to break, he says.

Some adolescents are “drinking more calories than they are eating” and sugary drinks provide “empty calories” with little nutritional value other than the energy, he adds.

Nutritionist Patrick Holford says increased sugar consumption is causing many health and behavioural problems.

“There is no question in my mind that increased consumption of sugar is driving not only obesity and diabetes but heart disease and breast cancer,” he says. Adolescents consuming too many sugary drinks become “more disruptive and less able to concentrate in school.”

While it is not certain that increasing the price of sugary drinks deters purchases, studies estimate that a 10 per cent price hike would lower consumption by about 7 per cent.

ESRI behavioural economist Dr Pete Lunn says the impact would be greater than just from the price increase because it would give a strong signal that people should not be consuming sugary drinks, as with the plastic bag tax.

People are more likely to change because, unlike with alcohol and tobacco, they can make substitutes, he says.

“The so-called nanny state argument applies less because you are primarily dealing with children.”

Taxes to deter the use of certain products are not new to Ireland, with alcohol and cigarettes among the most heavily taxed by the Exchequer.

UCD professor of economics David Madden points to a key difference between these and a tax on high-calorie foods and drinks.

The main justification for an extra tax on alcohol and cigarettes is the externalities or harm to others, such as passive smoking and drink driving, he says.

However, a tax on high-calorie products is not as straightforward and there is a less compelling argument the external effects.

A tax on soft drinks for children unaware of the effects would also affect an adult who was well aware of what they were doing, he says.

In his view, the best solution would be to improve knowledge and allow people to make well-informed decisions.

Making sure these drinks were not available in schools and offering alternatives might be a better route to deter children, he says.

Bodies representing the drinks industries argue against the benefits of the taxes. The Beverage Council of Ireland says such a tax would result in job losses, decreased competitiveness and a rise in cross-Border trade.

It argues that sugary drinks are not responsible for increases in obesity. “The consumption of any one food or drink cannot be pinpointed as the trigger,” the council says.

Food and Drinks Industry Ireland is “very concerned” at the suggestion of a “discriminatory” sugar tax which would “distort the market”, director Paul Kelly says.

He describes the tax as a “blunt instrument” penalising all consumers, regardless of their lifestyle and health.

Minister for Health James Reilly seems determined to introduce some strong measures to tackle childhood obesity in particular.

“If we do not address it, we may end up the first generation to bury the generation behind it, which is not the natural order of things or what any parent ever wants to be involved in,” he told the Dáil in recent weeks.

Whether or not a tax on sugary drinks is among anti-obesity measures introduced by the Government, it is clear that urgent action is needed to tackle this growing problem.

THE FAT TAX HOW IT WORKS IN DENMARK

Methods of taxing the rising tide of obesity are being debated around Europe following the initiative of Hungary who began penalising high calorie food and drinks on September 1st, with Denmark introducing a “fat tax” earlier this month.

The Danish tax operates as a surcharge on foods such as butter, oil and pizza which contain more than 2.3 per cent saturated fat. For consumers, these foods now carry a levy, calculated at €2.15 per kilogram of saturated fat, meaning that the cost of a pound of butter has increased by about 20 cent.

With an obesity rate of 9 per cent, Denmark is far below the European average of 15 per cent, while 23 per cent of Irish people are considered to be obese.

Denmark and Finland have already levied taxes on sugary drinks, while Hungary brought in a wide ranging “fat tax” on foods, soft drinks and alcohol in a bid to tackle its 18.8 per cent obesity rate.

British prime minister David Cameron suggested earlier this month that the UK could follow Denmark’s lead, and from January 1st France is to introduce a tax on sugary drinks which will add 2 cent to every 33cl can.

While taxing sugar-sweetened drinks is being discussed by the Special Action Group on Obesity in this country, Minister for Health James Reilly says there are no plans for a “fat tax” on high fat, salt and sugary foods “at this juncture”.

But, in response to a recent parliamentary question, Reilly said that he plans to ask the country’s fast-food operators to include calorie details on their menus.

For many Irish food manufacturers, a “fat tax” is an unwelcome vista.

“Under the Danish measures, Irish cheese and milk would be taxed as they contain more than 2.3 per cent saturated fats,” says Catherine Logan, nutrition manager at the National Dairy Council.

“But we have to remember that people eat whole foods rather than just single nutrients.”

Could there be a workable solution that doesn’t penalise nutritionally valuable foods such as dairy produce?

“There are alternative ways of taxing and with something like cheese you could come to an agreement where it is defined differently,” says Dr Martin Carraher, professor of food and health policy at City University, London.

His suggested measure for Ireland is to tax “processing” and, in doing so, favour foods that are produced locally. “You can do this as long as you don’t provide a barrier to trade.”

His suggestions would be welcomed by many Irish food producers, but without a change of direction from the Minister for Health, the prospect of an Irish “fat tax” in the near future is still an unlikely one.

– SUZANNE CAMPBELL