THE BLOG

Why Higher Taxes on Sugary Foods Don't Work

09/26/2014 05:39 EDT | Updated 11/26/2014 05:59 EST

The Heart and Stroke Foundation (HSF) has just come out with new guidelines to lower consumption of what they call "added sugar" to no more than 10 per cent -- or ideally 5 per cent -- of total calorie intake per day. That number today is around 13 per cent. This falls in line with the recommendations made by the World Health Organization earlier in the year. The reason for lower levels is that too much sugar is bad for our health and over consumption of sugar, similar to overconsumption of anything, can cause a number of health problems including obesity.

The HSF goes on to make a number of recommendations to help lower sugar consumption including higher taxes on sugar sweetened beverages.

I would agree with the HSF's recommendations if higher taxes actually worked. The problem is they don't. As with most advocates of higher taxes on so-called junk foods, they always look to tobacco as an example. But tobacco is a single product with no alternatives; taxing beverages is an entirely different matter.

Taxing sugar sweetened beverages may reduce consumption somewhat, but only very little. One study by Berkeley University economists found that even a 10 per cent tax would reduce fat consumption by less than 1 per cent. Another study in Health Economics found that a 20 per cent tax on sugar-sweetened beverages would reduce weight by a mere two pounds. And keep in mind that these estimates are usually on the high side. Fat taxes don't work because food purchases usually don't respond to price changes.

And then there are the unintended consequences of taxes on sugar sweetened beverages in a study conducted by Cornell University; half the households in a small town faced a 10 per cent tax on soft drinks and the other half did not. Those facing a higher tax saw a small decline in soft drink purchases but only for 3 to 6 months. However, in beer-purchasing households - where soft drink taxes were higher - beer consumption increased.

Regarding childhood obesity and soda consumption, a study at the University of Saskatchewan published in Applied Physiology Nutrition and Metabolism showed that there isn't a strong relationship between soda beverage consumption and obesity in children.

And of course there was a study called the "Australian Paradox", from the University of Sydney that suggests sugar may not be the culprit we think it is when it comes to rising obesity levels. The study covers the period from 1980 to 2003 when the level of obesity increased threefold in Australia while consumption of refined sucrose declined by 23 per cent.

This didn't sit well with the anti-sugar crowd. The authors were accused of deliberately falsifying the data, causing harm through their reckless disregard for public health and benefitting financially from their conduct. These were serious accusations. The University of Sydney set up an independent review that took six months to complete. The 89-page review completely exonerated the authors.

What these many studies show is that the causes of obesity are highly complex and immune to simplistic and poorly designed public policies. In most cases, such policies end up doing more harm than good.

No one would deny that overconsumption of sugar is a bad thing, but Canadians are adjusting their behaviour. According to Statistics Canada, from 1999 to 2013 consumption of soft drinks declined by 38 per cent. This decline occurred without any government policy intervention.

Higher taxes may make some people feel better that we are doing something, but that's hardly a justification for a program that doesn't work.

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