Sugar-coating the truth about soft drink taxes

Canada has an intake issue, but we need a broad labeling initiative, not specific consumption taxes


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GUELPH, Ont. Jan. 12, 2016/ Troy Media/ — A study suggesting direct links between a tax on sweetened soft drinks in Mexico and lower consumption is forcefully disputed by the soda industry. It also deflects focus from broader health issues, and better solutions, in Canada and elsewhere.

Beverage companies no doubt fear that Mexico could become a trendsetter for other nations, including Canada. For decades, policy-makers and consumer groups have advocated for more taxes on sweetened drinks and sugary food products. Industry argues that public education is key while health advocates claim that higher retail prices can effectively deter consumers looking for a sugar fix.

Stakes are very high in Mexico – it has among the highest obesity and diabetic rates in the world. Babies in strollers are often seen with soft drinks in hand. In the highlands of Chiapas, Coca-Cola is considered to have mystical powers and is used in religious ceremonies. Obesity rates were increasing at such an alarming rate that the Mexican government opted to follow in the footsteps of France, Finland, Hungary and some American states by implementing a tax on sweetened drinks. The tax increased retail prices by about 10 per cent.

The study had an impressive sample size of over 6,000 households in 53 Mexican cities. It concluded that, between January 2012 and December 2014, soft drink purchases declined by 12 per cent on average, and by 17 per cent for families with less means. While reported soft drink sales declined, sales for non-sweetened beverages increased by four per cent. The tax was implemented at the start of 2014, so the survey ended 10 months after the tax was put into force.

The results are encouraging, but the tax’s impact remains unclear. Soda taxes are particularly challenging to survey. It is difficult to isolate their effects since countries tend to tax many other food products. Chips and cookies were also included in the Mexican tax and the survey fails to assess how the tax affected overall sugar consumption per household.

One study in 2013 said that retail taxes on soft drinks may lead to higher fat and sodium intake through substitution, negating the effect of lower soda consumption. One industry group claims that a tax reduces intake per consumer by only six to seven calories, suggesting that the health benefits are negligible. Yet many industrialized countries are considering similar taxes.

In Canada, many provincial governments have had serious discussions about implementing sales taxes on soft drinks. A recent survey by Public Health Agency of Canada suggested that more than 40 per cent of Canadians would support such a tax if collected funds were used to fight childhood obesity. Whether governments would actually spend this revenue in such a manner is another matter.

Companies are spending a great deal persuading the public that education and sustained commitment to lifestyle changes are key. Over 30 jurisdictions around the world, including the U.S., have tried to adopt such taxes. But these political efforts have been no match for the highly organized pro-industry lobby. These companies fear that soft drinks could become the liquid version of the cigarette. So if Canada and the provinces want to follow Mexico, lawmakers need to be ready for a fight.

Sluggish sales of sugary beverages in recent years may actually give the industry ammunition. Sales are decreasing steadily by four per cent annually, so consumers seem to be getting the picture without the need for government intervention. As health-oriented habits inspire consumption decisions, sugary drinks simply have less currency. This trend will likely not change any time soon.

However, even though people are drinking less soda, obesity rates are still on the rise.

The culprit in Canada is not soda – it’s sugar itself. Canadians get barely two per cent of their calories from soft drinks, so the impact of these drinks is negligible.

Nearly 80 per cent of all food products have added sugar. Yet federal food labelling rules introduced in June 2015 do not include the requirement to list exactly how much added sugar is contained in products. Given that added sugar is linked to health problems like obesity, and that it is found in so much of the food Canadians consume, clearly labelling food products should be a much higher priority than taxing soda.

Consumers need to be given a chance to make educated and informed choices about all the food they consume. Legislators shouldn’t waste time figuring out what food products should be taxed. Instead, they should allow consumers to know exactly what they are buying and how much sugar they are eating.

Dr. Sylvain Charlebois is a Professor at the Food Institute at the University of Guelph. Sylvain is included in Troy Media’s Unlimited Access subscription plan.

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