Survey of sugar taxes and recent developments

ABSTRACT

The global obesity issue is often linked to the use of added sugars, but this relationship is unproven and there is no internationally recognised evidence that points to a direct link between the consumption of sugar and excess weight. However, in the sphere of public opinion, it is perceived as being beyond question. Furthermore, the objective of reducing added/free sugar from our basic diet has taken on a pathway of its own. This view is not supported by scientific research or published guidelines and should be challenged. Governments have largely chosen to target a reduction in the sugar content of soft drinks as a public health objective. This has been done through taxing sales or sugar content. Our analysis finds that there is a statistically significant impact on sugar consumption in some countries, mainly through the voluntary reformulations undertaken by beverage companies. But that this impact is small in terms of the volume of sugar eliminated. The study sees the application of similar taxes on food manufacturing as challenging, as sugar is used as a functional ingredient and food formulations are inherently more complex. From a public heath perspective, the study notes both a lack of historic evidence for a correlation between sugar consumption growth and obesity as well as a divergence between public health objectives and the current use of sugar. The study also considers behavioural aspects for consumers and food and beverage producers, surmising that the tax effect on consumers is partly short term while producers remain broadly focused on sales and marketing objectives, with public health changes seen as an industry-wide issue. More broadly, the study also notes that COVID-19 will skew results for many years to come. The report also considers the supply and demand dynamics of the sugar market in view of slowing demand, partly contributed to by sugar taxes. With low elasticity for both consumption and production, and with limited growth in the former, the implication is volatile world market prices. Sugar industries more than ever before will need to embrace diversification options such as bio energy and other bio products to ensure a sustainable future in a slowing sugar demand growth environment.