Why sugar taxes are a bad idea

by Ben Ramanauskas, Policy Analyst

The Soft Drinks Industry Levy, more commonly referred to as the sugar tax, came into force one year ago today. Although it’s only been in force for one year, let’s have a look at its impact so far and why sugar taxes are a bad idea.

The sugar tax was introduced in order to encourage people to live healthier lives. So, how successful has it been in achieving this? The answer: not very. It appears to have had minimal impact on consumer behaviour. For example, one study found that 62 per cent of UK consumers claim to have not changed their consumption behaviour in any way since the sugar tax came into force. Before the tax was introduced, 11 per cent of shoppers claimed that they planned to stop drinking sugary drinks as a result of the tax. In reality, this number has fallen to just 1 per cent. Surprisingly, the number of people who said they would continue to buy sugary soft drinks has risen since the tax was introduced.

This should not come as a shock to anyone who has looked into the effectiveness of other sugar taxes around the world. Sugar taxes are not very good at making people live healthier lives. People will still try to get their calorie kick some other way. For example, when a sugar tax was introduced in Mexico, it led to people eating more chocolate and sweets. Perhaps even more alarming for the public health lobby is the impact of a six month experiment conducted by researchers at Cornell University in which some households in an American city faced a 10 per cent tax on calorie-dense foods and drinks. The tax led to people buying more beer.

A further argument put forward by the government for introducing the sugar tax was that the revenue raised would be used to fund public spending schemes for children. However, it looks as though it has been ineffective at raising money for HM Treasury. According to the government, it was supposed to raise £520 million each year but current projections show that it will raise under half of this, at £240 million.

The sugar tax is also regressive - hitting the already hard up the hardest. Placing a levy on everyday products almost always take a greater share of income from poorer households than better off ones. The sugar tax is doubly regressive as low-income households tend to drink more sugary drinks than richer ones. Many people in the UK are struggling with the high cost of living and find it difficult to make ends meet. The sugar tax makes things even harder - taking more money from the people who have the least. The planning system, fuel duty, income tax, air passenger duty, and duties levied on alcohol and cigarettes, the sugar tax is just another way in which the government makes life more expensive for the poorest people in the country.

It is also bad news for business. Forcing companies to reformulate their drinks increases costs for them. These increased costs could be spent on investing in their business, expanding their operations, and increasing the wages of their employees. Taxes are always, ultimately, paid by people not businesses. This is either in increased costs to consumers, or lower wages and fewer job opportunities. The sugar tax is no exception. In fact, research conducted by Oxford Economics back in 2016 found that the sugar tax would eventually lead to more than 4,000 job losses across the UK.

The sugar tax is the nanny state at its very worst. People should be free to decide what they eat and drink. It is nobody else’s business - especially not an unaccountable quango such as Public Health England whose entire reason for being appears to be stopping people doing anything fun. The sugar tax represents an unacceptable infringement on personal liberty and freedom of choice.

It’s been a bad year for the sugar tax - it has failed to change consumer behaviour and has brought in far less revenue for HM Treasury than expected. However, the biggest losers are the public and business who have seen their everyday costs increase and have seen their freedom diminished at the result of a bloated and patronising State.