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Should the sugar tax be scrapped?

Jim Riley

16th July 2019

The sugar tax was introduced in April 2018, manufacturers have to pay more tax the higher is the sugar content of the drink.

The producers can still make high sugar drinks and pass the extra cost onto the customers. But over 50 per cent of them seem to have responded by cutting back the sugar content of drinks.

We know that well intentioned policies such as the sugar tax can sometimes have unforeseen consequences.

An important paper in the American Economic Review in 2006 by Jerome Adda and Francesca Cornaglia, then at UCL, examined the impact of the different tax rates on cigarettes imposed across the different American states. The higher the tax, the less were bought. But smokers compensated by both switching to higher tar content brands and by smoking further down the stub. If anything, higher taxes led to a more damaging health outcome.

Less firmly based is the anecdotal evidence of a rise in shoplifting in Scotland after the minimum pricing law on alcohol was introduced last year. The incentive to steal has certainly been created. A two litre bottle of strong cider could be bought for just £2.50 and now costs at least £7.50.

What of the sugar tax?

A 2013 study published in the well regarded PLoS ONE journal found a clear positive relationship, using evidence across 175 countries, between sugar consumption and national diabetes rates.

I published a paper last December in Palgrave Communications with Alex Bentley and Damian Ruck, two anthropologists at the University of Tennessee, looking at obesity and diabetes rates over time in the American states and counties, the sub-divisions of the states.

The growth in obesity (and, with it, diabetes) in America has been both rapid and frightening. In 1990, the Mississippi had the highest obesity rate of any state, at 15 per cent of the population.

By 2015, such a population would have looked exceptionally svelte. The lowest obesity rate was 22 per cent in Colorado, and several states had rates over 35 per cent.

In 1990, there was no correlation between household income and obesity/diabetes rates. By 2015, a strong negative correlation existed both across the states and across the counties within each state. Poor people had become hugely and disproportionately fat.

The emergence of so-called food deserts, areas where the population has difficulty in accessing affordable and nutritious food, is an important determinant. The evidence also suggests that the growth of high fructose corn syrup in the food economy is another.

There is a definite role for public policy in combating obesity and diabetes. Both the products on the shelves of supermarkets and the content of the products are legitimate concerns.

The negative link between obesity and income suggests that relatively modest gains in alleviating poverty could yield substantial reductions in obesity and diabetes rates.

The temptation to mock the Nanny state is always strong. But in the case of sugar, Nanny sometimes does know best.

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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