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Bad Tax Idea Finds Its Way To The Northwest Territories

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It looks like bad tax ideas have made the long journey all the way to Canada's Northwest Territories.

It all started when the NWT finance minister suggested, in his last budget speech, that he would "investigate introducing a sugary drink tax" in 2018 to fight rising obesity and diabetes levels.

Residents of the NWT already pay some the highest food costs in the country. So the last thing they need is a tax that further increases the cost of groceries that has no effect on improving health outcomes.

A soft drink tax might be justifiable if they reduced obesity and diabetes, but they don't.

The model many jurisdictions now use to justify such a soft drink tax is the one imposed in Mexico. There were high hopes that a 10 per cent tax would bring down obesity and diabetes rates when introduced in 2014. Unfortunately obesity rates have hardly budged and are slowly going up even as soda consumption has decreased.

It is no secret that obesity is a highly complex disease that's immune to a single policy.

Part of the problem is that Mexicans are consuming other high-calorie substitutes. One piece of evidence is clear, over 30,000 small mom and pop stores have been driven out of business throughout the country. Profits have also plummeted for other micro-stores or "tienditas."

In the case of Berkeley, California where the city imposed a similar tax, the evidence suggests soda consumption has dropped, but there is no evidence, or studies, that it had any effect on obesity levels or better health outcomes. Even in countries that have soda taxes such as France, Hungary, and Ireland, there's no proof that health has improved. And there's a reason there's no evidence; you can't conduct double blind tests with control groups with large groups of people and deprive them of only one product over extended periods of time. Until the anti-sugar advocates get permission to do that, all is just guessing and conjecture.

It is no secret that obesity is a highly complex disease that's immune to a single policy. In fact, a 2007 report by Canadian Diabetes Association doesn't even mention sugar as a key cause of higher diabetes rates in Canada. The main drivers, according to their report, are an aging population, lack of exercise, and genetic factors in the aboriginal and certain immigrant populations in Canada.

What we don't hear is that Canadians have been lowering their consumption of sugary drinks and pop. Over the past two decades years, according to Statistics Canada, Canadians are drinking 30 per cent less soda pop and consuming more water. And partly because of lower pop consumption Canadian consumption of "added sugars" have been falling as well.

And in the U.S. bottled water sales has beaten soda sales for the first time. All of this has happened without taxes on sugar-sweetened beverages.

Yet anti-sugar advocates continue to call on governments to try everything whether they work or not to reduce obesity levels. That's hardly the best way to do public policy.

We know that taxes on pop and sugary drinks don't work in improving health; what we do know is that they destroy jobs and push up groceries bills. The finance minister may what to think twice before burdening his citizens with an ineffective and costly new tax.

Patrick Luciani is co-author of XXL: Obesity and the Limits of Shame, published by University of Toronto Press.

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