The Government has for now turned down the opportunity to increase its revenue and tax us when we buy a sugary drink, despite persistent calls for it to do so and quite strong public support for a tax.
This public support will mean it is an issue that will not go away.
Some oppose the tax outright because they believe it to be an unwelcome intrusion in to our lives by a government which in their view mistakenly believes we are too wicked or stupid for our own good. Others support the tax because they eagerly subscribe to the view that we are too wicked or stupid or both and the purpose of government is to make us better people.
It is the opinions of those in the middle, who are not strongly liberal or socialist that are more likely to influence a government. It is presumed that their views are considered and informed and reflect the merits of a particular idea rather than a philosophical bent. The problem I see is that for their views to be considered and informed they need information which so far has not been forthcoming.
No one has even suggested a rate at which the tax should be levied. Without knowing what rate of tax will be imposed no one can know how consumers will react and what effect it will have on consumption and therefore if it is a good idea or not.
Tax proponents seem to think none of this matters because they argue that taxing something automatically reduces consumption, but is that really the case?
The tobacco tax is used as an example of where tax has reduced consumption. A packet of cigarettes has a $16 tax put on it raising the price from $4 to $20 and it certainly has had a chilling effect on consumption. Taking a 600ml bottle of fizzy, which at my service station is currently $4.10, to $20.10 would definitely reduce consumption of that drink and at the same time add fizzy drink to the list of things only rich kids can enjoy, thereby increasing inequality. I don't see how that is even remotely fair and just.
The other problem with such a hefty tax is that people could start making their own at home. It will be a lot cheaper than anything they buy now so consumption of sugar could skyrocket.
Britain introduced a tax of 17 cents for a standard sugary drink and it is very hard to see how this is going to make any difference to obesity at all. Firstly there is no guarantee the price of the drink will change. Manufactures might absorb the cost or spread it over other products.
The next question is if the price increases to the consumer what impact will that have? If the can of fizzy gets expensive enough to make a difference, that is great when the difference is the purchase of less pop but that is not the only possibility. A 20c increase in a bottle of fizzy could be one less apple in the shopping basket.
Shoppers could opt for the supermarket option where the drinks are usually around half the price than at a dairy. Buying them twenty at a time to save money will then result in an increase in consumption. Likewise shoppers might seek value in the 2 litre over the 600 ml, again increasing consumption. And as I said before they could always make their own and really heap the sugar in to it.
So sin taxes can have the opposite effect and increase consumption.
One point tax proponents make is that taxes work because there was a reduction in Mexico when it introduced a tax and that while the tax is not a total solution the benefit is that it gives a signal from the government and people then consume less. Well I agree with this.
In researching this I measured how much sugar is in a can of fizzy and I was shocked. I had no idea and while I don't drink much these days and it is more often than not with ice and a rum I will probably reduce my intake now that I am aware. But I bet the 5000 parents of children with rotten teeth won't, nor those who don't care about their child's sugar consumption.
Just because consumption reduces it does not mean obesity reduces. Most people drink fizzy without getting fat or losing their teeth. All a reduction in total consumption could mean is that the already responsible people are drinking less. The rest just carry on.
Whether a tax will even change the price of sugary drinks and what effect it will have on sugar consumption is not known. It is too simplistic to say that a tax is a good idea because it will raise the price and that in turn will reduce consumption and obesity. It is also too simplistic to ignore the possibility that it could do more harm than good and increase consumption.
Robin Grieve is an Auckland North board member for the ACT Party.
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