$800,000 to review 'sin tax'

LIBBY WILSON
Last updated 05:00 06/11/2014
Professor John Gibson
KELLY HODEL/Fairfax NZ
SIN TAX: Taxing unhealthy items may see people switch to cheaper brands, says Professor John Gibson who will lead a team studying the effects.

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A "sin tax" on unhealthy items is often touted as a way to stop people having them so often, but it might drive them to cheaper brands.

A team led by a University of Waikato researcher has just received $800,000 to study the idea, focusing on sugary soft drinks and cigarettes.

And while the data they'll analyse doesn't come from New Zealand, the findings have implications for Kiwis.

Economics professor John Gibson is leading a team looking into whether a "sin tax" would bring down consumption of fizzy drink and cigarettes.

It was one of four Waikato-led projects to receive funding from the Marsden Fund, and reaped $805,000.

"There are New Zealand studies which say 20 per cent fizzy drink tax would save X number of lives and those are the studies we have some questions about," Gibson said.

There was a loophole in data which focused on spend rather than quantity bought, he said.

"They might simply go from drinking expensive Coke to either cheaper Coke . . . or they might go from Coke down to Pams or Homebrand," he said.

For instance, Countdown sells a 600ml bottle of Coca Cola for $3.99 whereas 1.25L of Homebrand Lemonade is just 97 cents.

"The existing studies assume the reduction in spending translates to a reduction in quantity," Gibson said.

He suspects a tax would drive people to search out products that give a better bang for their buck.

And if consumption isn't going down the predicted benefits won't be there, he said.

"That's why [knowing the effects] matters quite a lot to Treasury, Ministry of Health."

Data for the three-year study is coming from Mexico and Indonesia as the right information wasn't available here, he said.

Research indicated taxes could influence people's health behaviour in the long term, Emma Sinclair of Emma's Food Bag said.

But there was a danger in looking for a single "culprit", said Sinclair, who holds a Bachelor of Science with honours in human nutrition.

"It is also difficult to single out if these initiatives are reaching the groups in society who need it most."

Student Shantal McIntosh thought the choices were more lifestyle than financial.

"I think taxes might make people think twice but not necessarily stop them," she said. And former Hamilton East ACT candidate Dr Ron Smith and Hamilton city councillor Garry Mallett both asked where "sin tax" would end if it was started. Mallett said the tax affected people who were casual users.

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"It gets everyone rather than the people who really need it."

He asked where the lists of sins would stop - would it eventually stretch to not exercising?

Three other Waikato-led projects received Marsden funding. A project on maintaining stable mangrove swamps got $816,500.

"Te Mauria Whiritoi: the sky as a cultural research" received $816,500 and a project on tracking changes in the terrestrial carbon cycle got $345,000.

- Waikato Times

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