Britain’s new soda taxing policy to beat obesity. expected to be enacted by April 2018, would pave a way for the development, consumption and import of low sugary drinks, according to HM Treasury, UK’s economic and finance ministry, announced in a new budget speech, on 16 March 2016. A detailed criterion for imposing tax on the beverages containing high sugar content, named as ‘the soft drinks industry levy’, was presented by the Chancellor of the Exchequer, George Osborne.
Britain’s New Soda Taxing Policy
The positive incentive — imposing taxes — is expected to reshape the nutritional condition in the UK by lowering threats of obesity, diabetes and other tooth related problems associated with high sugar intake. The taxes will be charged on the volumes in accordance with the total sugar content of drinks. The tax is being imposed in a tiered format. A lower percentage of tax would be applied to drinks or juices containing more than 5g of sugar per 100ml but a higher tax percentage would apply on the drinks with more than 8g of sugar per 100ml.
According to the HM Treasury guidelines, the taxes on the high sugar containing drinks would be imposed to encourage behavioral changes in customers, as well as to pressurize the beverage companies to develop less sugary drinks. The need for a taxing strategy was felt when more than 60 major health organizations demanded a tax on sugary drinks. Some of these include Public Health England, the British Medical Association, the Royal Society for Public Health, and the Health Select Committee of the House of Commons.
Donald Marron is a policy advisor and director of the nonpartisan Urban-Brookings Tax Policy Center in Washington, D.C. He gave his views on the efficacy of the tiered approach used in the Britain taxing policy by saying that it has the potential of steering price-sensitive customers from high-sugar drinks to low-sugar ones. He also believed that its bigger effect would display in encouraging companies to develop innovative drinks for the lower-tax category.
George Osborne, the British treasury chief and a member of Conservative and Unionist Party, whilst adding the beverage industry into the ‘tax-paying-category’, stated, “Five-year-old children are consuming their body weight in sugar every year”. He highlighted the issue of sugar consumption in the parliament by adding that “one of the biggest contributors to childhood obesity is sugary drinks”.
Osborne further insisted upon adding taxes on the sugary drinks which caused uproar in the soft drink industry. His action for skipping the rest of foods was ridiculed by Gavin Partington, director general of the British Soft Drinks Association, and tagged as ‘simply absurd’. Mr Partington further disapproved the act by adding, “We are extremely disappointed by the government’s decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years — down 13.6 percent since 2012.”
According to estimates, £520 million can be generated from taxes from the soft drink industry in a year. ‘The levied money would be used on extra sports and afterschool activity programs for both primary and secondary schools, further tackling the issue of child obesity,’ as mentioned by HM Treasury.
According to NHS, for adult population daily intake of free or added sugars should not be more than 5% of the energy, which makes 30g of added sugar a day. Whereas for children of five years of age, not more than 19g a day and those ranging from 7 to 10 should not consume more than 24g of sugar.
A statement released in a fact sheet by the Treasury pointed out the hopeful positive outcomes regarding the efficacy of the taxing procedure by stating: “The independent Office for Budget Responsibility expects that producers will change their behavior as a result of this levy, which will mean that the consumption of high added sugar soft drinks should fall over time.”
In response to the budget speech, Opposition Labour Party leader Jeremy Corbyn accused Osborne of failure. According to him, the Chancellor has been unable to meet his own targets and characterized the budget as Chancellor’s ‘six years of failure’. “The budget the Chancellor has just delivered is actually the culmination of six years of his failures,” said Corbyn.
An estimated £5 billion per year is spent on obesity-related treatments in the UK. Similarly, more than £8.8 billion a year, which is almost 9% of the NHS budget, is spent on the treatment of type-II diabetes in the UK. In the last decade obesity started turning into an epidemic in the U.K.
The government first started taking step against obesity in 2010, when they released their policy report until 2015 which aimed to promote healthy eating and help the public lose weight. In May 2014, the Public Health England (PHE) released the results of a survey which claimed people in the UK were consuming too much of sugar. Simultaneously, in June 2014, the government officially kick-started a discussion on the nation’s sugar reduction and the PHE released paper which outlined how they will reduce public sugar consumption.
In October 2015, the PHE release a review which called for price increase of sugar containing foods and claimed evidence showed increasing price of sugar containing foods decreased their consumption. The PHE also launched the Eatwell Guide on March 17, which showed a significant change from the Eatwell Plate by removing sugary drinks from the guide altogether. The guide also suggested limiting the daily sugar consumption. After the success of the Mexico sugar law, it seems the UK cabinet deemed following the same sort of strategy the best solution and released their new tax system.
Britain is not the first country to introduce a soda law. Many countries have imposed tax on the sugary drinks. In September 2011, Hungary raised a tax on a series of products other than soft drinks. In 2012, France enforced tax on sugary drinks. In Mexico, obesity among children aged 5 to 11 arose by 40% in 2006, which led to the formation of soda law in 2013, which then went into effect in 2014. It was not until November 2014 when Berkeley, California, secured the status of first American county with a soda law.