Sugar tax could boost both health and economy

LONDON: In Fiji, the traditional diet of fresh tropical fruits, leafy greens and fresh seafood is increasingly being replaced by imported, processed foods high in fat, salt and sugar. The result is an obesity epidemic (growing fastest in Pacific countries) and crippling levels of noncommunicable diseases (NCDs) such as stroke, heart disease and diabetes.

Ever since the Fiji government imposed a tax on sugary drinks, the beverage industry has resorted to common push-back tactics. Declaring taxes would hurt Fiji’s economy: jobs would be lost, communities would suffer.

In Fiji, however, a parent company owns 90 per cent of the drinks industry, with five sister companies producing all drinks, including water and juice – meaning a tax on sugary drinks will have minimal impact on the company’s profits and employment, as consumers would buy They substitute sugary drinks from the same company.

The tax also matters when weighing the economic benefits of reduced NCDs against potential welfare losses from reduced consumption of sugary beverages.

Fiji’s case is a lesson for policymakers around the world faced with industry lobbying against health taxes.

There is strong political will and commitment to reduce noncommunicable diseases, which remain the leading cause of death worldwide. In 2021 they were responsible for over 40 million deaths – almost three quarters of all deaths. Of those deaths, 15 million occurred in the “early” 30 to 69 age group, people who would otherwise lead productive lives.

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Diet is a major risk factor for NCDs, so taxes on sugary drinks have emerged as a popular and effective measure to reduce diet-related risk factors for NCDs. World Bank figures show that in 2020 more than 40 countries introduced various taxes on sugary drinks.

Some countries also tax unhealthy, low-nutrient, high-energy foods. Mexico taxes high-energy-density foods, such as fried foods and ice cream; Denmark, Dominica, Finland and Norway tax chocolate and confectionery.

Researchers around the world are looking for ways to group and tax foods based on their health, using science-based, non-discriminatory nutrient profiles.

Researchers at Imperial College London, UK, are designing taxes that do not place a financial burden on individuals or households, that are evenly distributed across income brackets, and that are administratively feasible.

The resulting policies could encourage consumers to eat healthier without increasing household food bills and encourage industry to reformulate their products to meet healthier nutritional standards. In a similar study on health taxes at the University of Oxford, UK, researchers also estimate the impact of different tax and subsidy scenarios on the health of the planet.

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While some policymakers fear these taxes could lead to job losses and an economic downturn, a global study found that most claims of an economic downturn are based on reports funded by the food and beverage industry that use methods to estimate job losses. and economic losses that do not (and cannot) take into account consumer reactions.

For example, a study in Mexico estimated that the combined tax on sugar and high-energy foods would cause up to 16,000 job losses — but a peer-reviewed paper using appropriate economic methods found no significant net change in employment.

Similarly, a study in Philadelphia, US, estimated 1,190 jobs lost to a sugary beverage tax, while another net estimate found no significant change in employment. The conclusion from reviewing studies around the world was that the more robust studies showed negligible job loss and, in some studies, small job gains.

While there may be initial job losses in the food and drink industries as consumer spending shifts from taxed goods to other goods and services, employment in these sectors is increasing. In addition, government revenue from the tax will later increase government spending in other sectors. Proceeds can also be diverted to programs to improve the livelihoods of those affected by a job loss, or subsidies for healthier foods such as fruits and vegetables.

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A five-year Global Alliance of Chronic Disease project in Fiji and Samoa is investigating how to scale up nutritional interventions to prevent two important NCDs: type 2 diabetes and hypertension. The project advises development partners, policymakers and community groups on the factors that either support or undermine NCD prevention strategies.

NCDs impose significant social and economic burdens on individuals, households, communities, health services, employers and governments, leading to reduced labor productivity and ultimately a decline in national income and human capital investment.

NCD prevention strategies are critical and require a comprehensive package of population-level interventions with a whole-of-society approach. The global analysis and the Fiji example show that there is little evidence to support industry claims of an economic downturn. Instead, in addition to health and productivity benefits, there are significant economic benefits through increased revenue and saved healthcare costs.

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