Blog | Should We Introduce a Sugar Tax in New Zealand?

By Katie Cammell

Obesity is a growing policy problem in New Zealand. The New Zealand Health Survey 2016/17 found that around 32 per cent of adults were obese, and a further 34 per cent of adults were overweight but not obese [1]. Moreover, around 12 per cent of children were obese, and a further 21 per cent of children were overweight but not obese. According to the Ministry of Health:

Although some people are more genetically susceptible to weight gain than others, the rapid increase in the prevalence of obesity in recent years has occurred too quickly to be explained by genetic changes and most experts believe it is due to living in an increasingly “obesogenic” environment – one that promotes over-consumption of food and drinks and limits opportunities for physical activity [Ministry of Health, “Obesity”]

What can New Zealand do about this growing problem? Public health advocates have called for a public intervention through a sugar tax.

It is unclear what form a sugar tax would take in New Zealand.  The tax could be applied to sugar, high-fructose corn syrup, products containing sugar, particular categories of products containing sugar, honey, artificial/natural sweeteners, and/or products that contain a high concentration of fructose [2]. For the sake of simplicity and clarity, this article will focus on a tax that targets Sugar-Sweetened Beverages (SSBs). The New Zealand Beverage Guidance Panel defined SSBs as “any beverage that contains added caloric sweetener, usually sugar”, and identified SSBs as one of the two leading contributors of sugar to the diets of adults and children in New Zealand [3]. In New Zealand, the consumption of SSBs has been linked to an alarming range of health problems, from dental and cardiovascular diseases to weight gain, type 2 diabetes and dyslipidemia [4].

The debates regarding a sugar tax are comprehensive and detailed, and only a brief overview of the debate is presented here.

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Reasons We Should Have a Sugar Tax

Policy interventions are essential

From this perspective, policy interventions are the most effective mechanisms for addressing unhealthy weight gain at the population level [5]. While individual-focused interventions have proven effective, they are expensive and are thus limited in their coverage and sustainability.  On the other hand, policy-based interventions are typically cheaper to implement and are therefore more sustainable, cost-effective, and wide reaching. A recent study in Australia found that policy-based interventions into obesity were ranked the highest in terms of their cost-effectiveness and breadth of coverage [6].

It makes economic sense

Advocates for the sugar tax have highlighted that a policy-based intervention into obesity and diabetes makes economic sense. A recent report from the World Health Organisation stated that according to estimates, a tax on SSBs of 1 per cent per ounce in the United States would result in more than USD 17 billion in health care cost savings over a ten year period [7]. Moreover, the revenue raised from the sugar tax can be used to promote the health of the population. In the United States, a sugar tax could generate approximately USD 13 billion in annual tax revenues, which could be redirected into essential healthcare services as well as education in nutrition.

Source: Jenesa Jeram, The Health of the State, Wellington: The New Zealand Initiative, 2016.

Reasons We Should Not Have a Sugar Tax

It is condescending and classist

From this perspective, state intervention into the lifestyle choices of its citizens sends the message that individuals are not competent enough to make decisions about food and drink consumption for themselves [8]. For proponents of this view, the government should focus on ensuring that people are fully aware of the health implications of drinking SSBs, rather than limiting the choices of consumers.

Moreover, the sugar tax does not address the fact that poor, Māori and Pacific communities are disproportionately affected by diabetes and chronic disease, and they will be hit harder by a sugar tax [9].  Because low-income households are the most likely to purchase highly processed food, the sugar tax will affect these households disproportionately [10]. According to the New Zealand Initiative’s Chief Economist, Dr Eric Crampton, sugar taxes “presume poor people are too dumb to make the ‘right’ choices and must be guided by their betters” [11].

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The evidence that a sugar tax will improve health outcomes is weak

In August 2017, the New Zealand Institute of Economic Research (NZIER) published a review of the literature surrounding sugar taxes and their effectiveness [12]. The NZIER found that at present:

  • There is insufficient evidence to determine whether consumers have been substituting SSBs for other sources of sugar or calories;
  • Methodological flaws and incomplete measurement in research means that estimates of reduced intake of sugar are frequently overstated;
  • The reduction in sugar intake reported by studies with sound methods is minimal, and is unlikely to generate substantial health benefits;
  • None of the studies that are based on actual experience with sugar taxes, rather than projected outcomes, have reported an impact on health outcomes;
  • Studies that have reported improvements in health outcomes are modelling studies that are not based on observations of actual behaviour, and have assumed a meaningful change in sugar intake with no compensatory substitution.

The NZIER has been critiqued for publishing a “seriously flawed” and “rather incomplete” [13] report that “drew the wrong conclusions” [14]. However, it continues to pose a serious challenge to the effectiveness of the sugar tax and raises doubts about whether it should be implemented in some form in New Zealand.

Conclusion

A report from the World Health Organisation raised an interesting point on the sugar tax, which should be taken into consideration alongside these arguments:

To reduce over-consumption of sugars and halt the epidemic of obesity and diabetes, countries need comprehensive action plans that combine taxation, restriction of marketing of sugary products to children, and education. [15]

It is worth considering a sugar tax’s role within a more holistic approach to addressing obesity and diabetes. Deeper philosophical arguments are also at play here: how much responsibility should the government take for the health and wellbeing of its citizens, and to what extent can the government intervene in the lives of its citizens?

Bibliography

[1] Ministry of Health. “Obesity Statistics”. Page last updated 01 August 2018. Retrieved from https://www.health.govt.nz/nz-health-statistics/health-statistics-and-data-sets/obesity-statistics

[2] Ministry of Health. “Sugar Tax Presentation Slides”. Documents Released Under the Official Information Act: Item #12. Retrieved from https://nzinitiative.org.nz/reports-and-media/reports/sugar-tax-oia-summary-and-background/

[3] New Zealand Beverage Guidance Panel. “Policy Brief: Options to Reduce Sugar Sweetened Beverage (SSB) Consumption in New Zealand”. Pacific Health Dialog, 20, no. 1 (2014): 98-102.

[4] ibid.

[5] Sundborn G., Merriman TR., Thornley S., Metcalf P., Jackson R. “An ‘End-Game’ for Sugar Sweetened Beverages”. Pacific Health Dialog, 20, no. 1 (2014): 22-30.

[6] Gortmaker, Steven L., Swinburn, B., Levy, D., Carter, R.,  Mabry, Patricia L., Finegood, D., Huang, T., Marsh, T., and Moodie, M. “Changing the future of obesity: science, policy, and action”. The Lancet, 378 (2011): 838-47.

[7] World Health Organisation. “Taxes on Sugary Drinks: Why Do It”. Retrieved from http://apps.who.int/iris/bitstream/handle/10665/260253/WHO-NMH-PND-16.5Rev.1-eng.pdf;jsessionid=EBE69CA56E9B077308E9B75BD863C138?sequence=1

[8] Hennessy, Mark. “A Bitter-Sweet Policy”. Retrieved from https://nzinitiative.org.nz/reports-and-media/opinion/a-bitter-sweet-policy/

[9] Genter, Julie Anne. “Sweet disorder: Why New Zealand needs a sugar tax now”. Retrieved from https://thespinoff.co.nz/society/20-02-2017/sweet-disorder-why-new-zealand-needs-a-sugar-tax-now/

[10] ibid.

[11] Crampton, Eric. “Tax Idea Leaves us Sour”. Retrieved from https://nzinitiative.org.nz/reports-and-media/opinion/tax-idea-leaves-us-sour/

[12] Wilson, Peter, and Hogan, Sarah. Sugar taxes: A review of the evidence. NZIER report to Ministry of Health. Wellington: New Zealand Institute of Economic Research, 2017.

[13] Blakely, T., Wilson, N., Mizdrak, A., Cleghorn, C. “And now the Brits are doing it: A sugary drink tax levy on the industry”. 2018. Retrieved from https://blogs.otago.ac.nz/pubhealthexpert/2018/04/03/and-now-the-brits-are-doing-it-a-sugary-drink-tax-levy-on-the-industry/

[14] Swinburn, Boyd. “Doubters try to bury sugary-drinks tax”. 2018. Retrieved from https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11997194

[15] World Health Organisation. “Taxes on Sugary Drinks: Why Do It”. Retrieved from http://apps.who.int/iris/bitstream/handle/10665/260253/WHO-NMH-PND-16.5Rev.1-eng.pdf;jsessionid=EBE69CA56E9B077308E9B75BD863C138?sequence=1

The Public Policy Club is a non-partisan club at the University of Auckland that aims to encourage, educate and involve students from all backgrounds in the education and development of political knowledge. The views and opinions expressed in this article are those of the author and do not necessarily reflect those of PPC.

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