Early in April 2019, the Task Force for Fiscal Policy for Health published their report ‘Health Taxes to Save Lives.’ This report explores the effect of taxing tobacco, alcohol and sugar-sweetened beverages (SSBs) on the purchase and consumption of these products.

These products are the focus of this report because they contribute significantly to increasing a person’s risk of developing a non-communicable disease (NCD).

They explain that the introduction of well-designed excise taxes can significantly reduce the consumption of tobacco, alcohol and SSBs and as a result improve the public’s health, save lives and raise a significant amount of revenue that can be used to tackle NCDs.

In order to reap the benefits of taxing these products, the Task Force recommends that the imposed tax should be an excise tax (as opposed to a sales tax or increasing customs duty)  and the level of tax should be high enough to deter consumption from those in both high and low-income brackets.

“If all countries increased their excise taxes to raise prices on tobacco, alcohol, and sugary beverages by 50 per cent, over 50 million premature deaths could be averted worldwide over the next 50 years while raising over the US $20 trillion of additional revenues in present discounted value. Raising taxes and prices further in future years would save additional lives and raise even more revenues.”

The report stresses the importance of the taxation of these three products as a strategy for tackling NCDs as data has shown that 10 million premature deaths per year could be prevented by reducing the public’s consumption of tobacco, alcohol and SSBs.

The report also addresses industry’s opposition to taxation, which the Task Force describes as “flawed” and they further state that industry’s arguments against taxation are “false or greatly exaggerated, and none justify inaction.”

In the report, the Task Force takes each of industry’s arguments and addresses them showing why they are flawed, false or exaggerated. Industry’s arguments include:

• A decline in government revenue
• Loss of employment
• A negative impact on the poor
• Illicit trade, tax avoidance, and tax evasion

They also explain how industry has tried to influence and undermine public policy in unethical ways to halt the progress of taxation.  Industry has sought to confuse the public, censor scientific research on the harms of their products and have used other such tactics to disrupt work by public health officials and policy workers.

The report concludes with a call for countries to take urgent action to reduce the consumption of tobacco, alcohol and SSBs. The Task Force, at the end of its report, recommends the following:

• Countries should rapidly and significantly increase tobacco taxes and continue to raise taxes over time to make tobacco products less affordable, to reduce use, and to prevent unnecessary death and disease.
• Countries should rapidly and significantly increase alcohol taxes and continue to raise taxes over time to make alcohol less affordable, to reduce consumption, and to prevent unnecessary death and disease.
• Countries should actively implement policies directed at reducing consumption of sugar as it is a significant contributor to the rise in obesity, diabetes, and other associated noncommunicable diseases.
• Countries should design their health taxes to be easy to administer, hard to manipulate, and difficult to game.
• In addition to significantly raising health taxes in the short term, countries should improve excise tax administration and enforcement in order to reap the full benefits for health and revenues.
• The international community – including international financial institutions and UN agencies, governments, civil society, and the research community – should take action to support countries to adopt, implement, and significantly raise effective health taxes.

You can download the full below.

In April 2018, the UK Government introduced their sugar sweetened beverage (SSB) tax. Drinks containing 5-8g per 100 ml of sugar are now taxed at a rate of 18p per litre and drinks containing over 8g per 100 ml are taxed at a higher rate of 24p per litre. The tax is applied to all manufacturers and to date 457 companies are registered to pay this tax.

The tax has been successful in two regards. Firstly, in the run-up to the introduction of the tax many manufacturers reformulated their drinks to reduce the amount of sugar they contain to avoid paying the tax. This included supermarket giant Tesco’s who, in 2016, reduced the sugar content of their soft drinks to below 5g per 100ml. Other brands who have reduced the sugar content of their products include Ribena, Fanta and Lucozade.  Some brands, such as Coca Cola have decided not to reformulate their products as they are concerned about losing their customers. This means that in the UK the price of a can of coke has increased by 8p and a large bottle of coke by 50p.

The second success of the sugar tax is the revenue that has been raised. In the first six months of the tax being introduced £154m was raised. The money raised from the sugar tax will be used to double the funding available to primary schools for PE and sports programmes to support healthier, more active, lifestyles in children. The funding will not only go towards expanding PE and sports programmes but to also expand breakfast clubs in primary schools ensuring that children have access to a healthy breakfast every week day.

Islands states throughout the Caribbean are considering introducing a SSB tax and it is hoped that the recent success of the UK and other countries like Mexico will provide Governments with the evidence of the impact of a SSB tax.

On 1st November 2018, the Ministry of Health in St Kitts held a public consultation on SSB taxation. During this consultation they provided information on their proposed approach to sugar sweetened beverage (SSB) taxation. Lake Health and Wellbeing supports the government’s plans to tax SSBs and has published a position statement outlining our views on this topic.

SSB Taxation

The taxation of SSBs has been utilised as a method of tackling obesity by creating a deterrent which leads to a reduction in the purchase and consumption of SSBs.

Taxation of SSBs has three important aims. The first it to incentivise manufacturers to reformulate or replace their products to create healthier options, the second is to deter the public from purchasing and consuming SSBs by making them unaffordable and the third is to raise funds from the tax revenue that can be used to support initiatives aimed at improving the health of the public.

Caribbean Children’s SSB Consumption

Children in the Caribbean drink large quantities of SSBs putting them at risk of becoming obese or overweight.  Caribbean children’s frequency of consuming SSBs was found to be amongst the highest out of 187 countries. Furthermore, teenagers (12 to 15-year olds) in Barbados, Jamaica, the Bahamas and Trinidad and Tobago reported drinking SSBs three times or more a day, and in St Kitts and Nevis it was found that children consumed at least one carbonated soft drink a day.

SSB Consumption and Obesity

This high consumption of SSBs has been linked to weight gain and obesity in adults and children, and obesity or being overweight increases a person’s risk of developing a number of non-communicable diseases such as type 2 diabetes, stroke, heart disease and cancer.

Obesity is a significant challenge in St Kitts and Nevis. A PAHO report revealed that 33% of secondary school children in the twin island state were overweight and 14% were  obese. More recently, in 2017, a UNICEF report published that 26% of children in  St Kitts and Nevis are obese. When looking at adults in St Kitts and Nevis, the  PAHO study reported that 34% of adults were overweight and 45% were obese.

Tackling Obesity

In order to address the high rate of obesity in St Kitts and Nevis, a number of strategies are required and reducing the public’s consumption of SSBs by introducing a tax is just one of many approaches.

Our Position Statement

To find out more about the St Kitts Ministry of Health’s approach to SSB taxation and our position on this approach. You can download our position statement below.

Document: Taxing SSBs in St Kitts: A Position Statement

Published by: Lake Health and Wellbeing

Date: 15th November 2018

Download here: SSB Taxation Position Statement

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References

1. UNICEF, Situation Analysis of Children in the Federation of St Kitts and Nevis, UNICEF Office for the Eastern Caribbean Area and the Government of St Kitts and Nevis, Christ Church, Barbados, 2017
2. PAHO, Health in the Americas, 2012: St Kitts and Nevis, PAHO, 2012
3. Xuereb, G. (2017). Sugar Sweetened Beverages Taxes in the Caribbean – Progress and Challenges.
4. Yang, L. et al. (2017). Consumption of Carbonated Soft Drinks Among Young Adolescents Aged 12 to 15 Years in 53 Low- and Middle-Income Countries.  American journal of public health, 107(7), pp 1095-1100.

On 5^th December, South Africa’s parliament passed a bill to introduce a tax on drinks with a high sugar content.  This comes after 18 months of negotiations which included four consultations with the public.

The tax will come into effect on 1^st April 2018 and will impose a levy of 2.1 cents per gram of sugar on all sugar-sweetened drinks; the first 4g of sugar per 100ml will be exempt. What this means in practice is that the price of the average can of coke will increase by 11%.

The South African government expects to raise a significant amount of money from this new tax which will be invested into health promotion projects to tackle obesity and facilitate the prevention of non-communicable diseases like diabetes, cancer and heart disease.

With South African being one of the top 10 consumers of sugary drinks in the world, it is hoped that this tax will lead to a reduction in the consumption of these drinks which will play a part in improving the health of South Africans.

Tracey Malawana, the coordinator of the Healthy Living Alliance said:

“We applaud Members of Parliament for putting the health of millions of South Africans before the narrow interests of the beverage and sugar industries.

“Thanks to Treasury and MPs, South Africa is on the right path to reverse the alarming numbers of diabetes cases and other NCDs associated with obesity. We now look to the President to sign this important law without delay. “

South Africa joins a growing number of countries who have introduced a tax on sugary drinks. These countries include Mexico, Barbados, France, Denmark, Hungary, Portgual, Saudi Arabia,  India, Thailand and others.

Sugar taxes are just one part of the global strategy to improve the public’s health through government policy. Health policy experts recommend that governments explore policies around three main areas: unhealthy foods, alcohol and cigarettes, and within these three areas to explore policies that restrict access, ban advertising (particularly to children) and increase taxes.

South Africa will have to wait a few years to determine the effect of introducing the sugar tax but initial evaluations from Mexico, who has had a sugary drinks tax for a couple of years, are very promising. An analysis of the sugar tax in Mexico found that sugary drinks consumption dropped by 5.5% one year after the sugary drinks tax was introduced, and in the second year sugary drinks consumption fell by 9.7%. Based on this,  the introduction of this tax  in South Africa brings the nation one step closer to tackling one of the key risk factors for non-communicable diseases and obesity.

Yesterday, the UK government published its policy document, ‘Overview of Legislation in Draft’,  which outlines the changes to tax law which the government plans to introduce in its 2017 finance bill, in secondary legislation and in future finance bills.

This draft legislation includes information on the soft drinks industry levy (sugar tax) which will come info effect from April 2018.

With regards to the sugar tax the Overview of Legislation in Draft says:

“As announced at Budget 2016, and following consultation on the design and implementation of the levy over the summer, the government will legislate in Finance Bill 2017 for the Soft Drinks Industry Levy. This is a levy on importers and producers of beverages that contain added sugar to help tackle childhood obesity. The 2 thresholds, at 5g and 8g of sugar per 100ml have been designed so that, by taking reasonable steps to reduce sugar content, UK producers and importers of soft drinks can pay less or escape the charge altogether. The levy will take effect from April 2018.

There will be an exemption for the smallest operators and a credit against levy liability, subject to evidence, for liable drinks that are exported.”

The government expects the sugar tax to raise £520M in its first year and these funds will be used to double the funding available to primary schools for PE and sports programme. The government has estimated that the sugar levy will raise £320 million a year for primary schools to support healthier more active lifestyles in children. The funding will not only go towards expanding PE and sports programmes but to also expand breakfast clubs in primary schools ensuring that children have access to a healthy breakfast every week day.

The government has also published a full policy document on the sugar tax which gives further information on the objectives of the tax, who it will affect and how it will be monitored.

The Lake Foundation is glad to see that the government is making progress on implementing the sugar tax and hope that it will go some way to tackling obesity in the UK.

This week, supermarket giant Tesco announced that it will make further reductions to the amount of sugar in its soft drinks and these newly reformulated drinks will be available in-store from 11^th November.

This reduction in sugar is a direct result of the government’s sugar tax and is part of Tesco’s ongoing commitment to reduce the sugar, fat and salt content of the products the company makes.  This reduction in sugar content means that Tesco’s soft drinks will now have less than five grams of sugar per 100ml meaning that the average Tesco customer will be consuming 20% less sugar than they did in 2011.

Tesco is working in partnership with Diabetes UK and the British Heart Foundation to improve the nation’s health and so far they have reduced the salt, sugar and fat content of over 4,200 products.

Matt Davies, Tesco UK’s CEO said of this recent reduction in sugar:

“This is just one part of our plans to make the food on our shelves healthier by reducing levels of sugar, salt and fat in our own brands”

This reduction in sugar can be seen as a success of the government’s sugar levy (sugar tax) which will apply to drinks with a total sugar content above 5 grams per 100ml. A higher rate will be applied to drinks with more than 8 grams per 100ml. The levy won’t be applied to milk-based drinks or fruit juices. The levy will come into effect from April 2018.

The money raised from sugar levy will be used to double the funding available to primary schools for PE and sports programme. The government has estimated that the sugar levy will raise £320 million a year for primary schools to support healthier more active lifestyles in children. The funding will not only go towards expanding PE and sports programmes but to also expand breakfast clubs in primary schools ensuring that children have access to a healthy breakfast every week day.

The Lake Foundation is happy to hear that Tesco has taken this step to reduce the sugar content of its soft drinks and if more companies follow suit this can make a significant contribution to improving the health of the UK’s population.