In a recent pre-budget submission Australia’s peak doctor organisation has called for a tax on sugar-sweetened beverages.
The tax rate would be 50 cents per 100 grams of sugar, which would add around 20 cents to a 375ml can of coke.
Similar taxes have been imposed in 108 other countries including UK, France, Mexico, Chile as well as in several US states.
The proposal is estimated to raise $3.6 billion in government revenue over the forward estimates which could be used to invest in preventative health measures and could save the estimated $38 billion that obesity will cost the Australian health system if no action is taken.
A can of coke contains approximately 40 grams of sugar. If you want to get a visual on that, get a big glass of water, add 10 teaspoons of sugar, stir and drink.
The AMA estimates that over 25 years a sugar tax could result in 16,000 fewer cases of type 2 diabetes.
But would it work? The UK introduced a very similar structured tax in 2018. Within 12 months, sugar intake fell by 11 grams per day in adults and 5 grams per day in children.
There are various arguments against a sugar tax. Some suggest it will increase the cost of living, but I guess that’s the point, to discourage the purchase of sugary products and to encourage alternatives, like water which comes free from the tap.
The sugar industry suggests that farmers will take a hit. But around 80% of our sugar production goes overseas, so a local tax should not have a big impact.
The Australian Beveridge Council says that there is a lack of evidence that soft drinks have any discernible impact on weight, and that soft drinks aren’t driving the nation’s waistline. They suggest a sugar tax is illogical and is just a revenue raiser.
In 1994 the seven CEOs from the major tobacco companies testified under oath to the US Congress that they did not believe nicotine to be addictive and that evidence linking smoking to diseases like cancer was inconclusive. Sound familiar?
The benefit of a tax based on sugar content (rather than drink volume) is that it encourages manufacturers to reformulate their products to reduce sugar content.
Politicians in Australia have not yet warmed to a sugar tax but have showed increasing interest in recent times. In March 2024 Labour minister Mike Freelander requested a Parliamentary Budget Office analysis of a 20% tax on sugar sweetened beverages. Following this a federal parliamentary enquiry recommended a sugar tax and the Australian Greens have consistently showed support. Hopefully our politicians will come around in their own sweet time.
by MARK DOUGLAS
FCPA
Managing Partner of Francis A Jones
www.faj.com.au