Will New Zealand adopt a soft-drink tax?

High-sugar drinks are blamed for rising rates of obesity, diabetes and tooth decay.
MARK TAYLOR

High-sugar drinks are blamed for rising rates of obesity, diabetes and tooth decay.

The recent surprise move by the UK to introduce a sugar-levy on soft drinks from 2018, has invigorated debate on the anti-obesity measure in New Zealand. Health academics are now saying a similar tax here is inevitable and polls appear to show a change in mood. Despite this many remain unconvinced citing a lack of evidence it will work. Cate Broughton reports.

When UK Chancellor George Osborne announced his government's introduction of a tax on soft drinks he acknowledged the role of high-sugar drinks in making large numbers of British citizens fat and sick.

He made a link between soft drinks and tobacco, in terms of their impact on human health, without actually mentioning the toxic product. 

Britain has introduced a sugar-tax on soft drinks.
STEFAN WERMUTH

Britain has introduced a sugar-tax on soft drinks.

"I am not prepared to look back at my time here in this Parliament, doing this job and say to my children's generation... I'm sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing," he told the House of Commons. 

The UK is treading the same path with soft drinks as it has with tobacco - government intervention via tax to put prices up and drive consumption down.

The question is will our government do the same. 

Just weeks after the UK news, 74 New Zealand health academics signed an open letter calling on the government to introduce a 20 per cent excise tax in the next budget. 

While the government and Labour have said they want more evidence a tax would be effective, those who have made up their minds say they have plenty of proof.

A 2014 study by University of Otago epidemiologist Professor Tony Blakely showed a 20 per cent tax on sugar sweetened carbonated drinks would prevent 67 deaths from cardiovascular disease, diabetes, and diet-related cancers per year.

Associate professor Tony Blakely is "very confident" a tax on sugar-sweetened drinks would see a reduced consumption.
CRAIG SIMCOX/FAIRFAX MEDIA

Associate professor Tony Blakely is "very confident" a tax on sugar-sweetened drinks would see a reduced consumption.

"I am very confident that if we were to put a tax on sugar sweetened beverages we will definitely see a reduction in consumption, a shift to bottled water, tap water, to coffee, tea and to diet drinks as well and I'm very confident it will result in health gains by reducing obesity rates."

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Blakely said his view was based on his own preliminary findings, and many more extensive studies modelling the effect of taxes based on sales data around the world.

On Friday an Australian research team published its finding that a 20 per cent tax would save 1,600 lives over 25 years and save the health system NZ$684 million. 

Katherine Rich says Mexico's soft drinks tax had made "almost no change to sales" in two years.
TIM HALES/STUFF

Katherine Rich says Mexico's soft drinks tax had made "almost no change to sales" in two years.

The evidence coming out of Mexico strongly supported a soft-drink tax to address obesity Blakely said. 

In 2013 the Mexican parliament passed legislation to impose a tax of one Peso per litre of sugar sweetened beverages, boosting the price by about 10 per cent, to address the country's high rates of obesity.

The tax came into effect on January 1, 2014.

Health Minister Jonathan Coleman says there needs to be more evidence that a sugar tax would reduce obesity.
ROBYN EDIE/ FAIRFAX NZ

Health Minister Jonathan Coleman says there needs to be more evidence that a sugar tax would reduce obesity.

In January the first peer-reviewed study of the tax by a group of Mexican and US researchers was published in the BMJ (formerly the British Medical Journal). It found that during the first year, sugar sweetened drinks consumption in Mexico had decreased by an average of six per cent from what would have been expected had the tax not been imposed. 

The study analysed sales data for all sugar sweetened drinks from a large sample of Mexican households representing 63 per cent of the population, provided by Nielsen Mexico consumer panel service.

Reviewed by numerous independent economists from around the world and adjusted for household composition, unemployment rate, inflation and cost of living in various parts of Mexico, the study was widely cited as proof the tax had reduced consumption of sugary drinks.

In April, New Zealand Food and Grocery Council (NZFGC) chief executive Katherine Rich said 2015 figures obtained from Nielsen showed sales of sugar sweetened soft-drinks had "bounced back" to pre-tax volumes after a small reduction in 2014.

​In an article on the NZFGC website Rich said the data showed the tax had made "almost no change to sales volumes in the two years since it was implemented".

She said the 0.5 per cent decline seen in Mexico was "a lot less" than the 4.7 per cent decline in sales in New Zealand during the same period without a sugar tax. "Such declines are expected as globally many people have got the message that consuming too much sugar each day is not healthy and consuming less," said Rich.

"Post the tax all that has changed is that people are paying more for both sugared and non-sugared sodas, including bottled water, and the government has an extra 20 billion pesos in the general fund."

Moreover, on average, Rich said sugary soft drinks remained much cheaper in Mexico than non-sugar varieties "so the tax is not sending any price signal to consumers at all".

The Nielsen sales data supplied to the NZFGC was from scanned sales and manual auditing of selected retailers in Mexico of all carbonated drinks, but not all sugar sweetened drinks, director of Fast Moving Consumable Goods for Nielsen Geoff Smith said.

One of the authors of the BMJ study, health economist Dr Shu Wen Ng from the University of North Carolina said the study group had not finished their analysis of the 2015 data, so could not comment on it.

However, she said for the best understanding of the effect of the tax it would be inappropriate not to use sales data for all sugar sweetened beverages as non-carbonated sugar sweetened drinks such as flavoured water and fruit flavoured drinks were popular throughout Mexico.

It was also important, when analysing sales data, to take economic and environmental factors such as population growth into account, she said. 

Ng said she found it "amusing" that the food industry objected so strongly to the tax despite saying it failed to work. 

In a statement issued after the UK's move on the tax Beverage Council of New Zealand president Olly Munro said the group opposed a tax on soft-drinks because it would "only perpetuate the myth that they [soft drinks] are the cause of the obesity problem in this country".

"They are not. Nutritional literacy, moderation and exercise are key to helping fix this particular health issue. Taxation is not part of the equation," he said.

Munro cited the 2015 Nielsen data on sales of sugar sweetened fizzy drinks in Mexico provided to the NZFGC and also pointed to the failed Danish fat tax, abandoned after just one year in 2012.

With much talk about evidence on consumption levels, what about proof a tax will reduce obesity? 

In a speech at the Sport NZ Connections Conference this week Health Minister Jonathan Coleman made it clear this is what the government would need to justify the tax.

"As regards a sugar tax, despite the impression you might gain through the media, there is no evidence that a tax on sugary drinks decreases obesity."

He went on to say the policy on tobacco could not apply to soft-drinks, "as progress on smoking rates has been made with a taxation rate of 150 per cent".

Blakely said the "deep irony" was that there was more evidence for a tax on soft-drinks than on the 22 measures in the government's child obesity plan. 

"You will never have 100 per cent certainty when you are trying to act to prevent something happening that you can see coming up in the future - but you will have logic models."

Professor of population nutrition and global health at the University of Auckland Boyd Swinburn said everybody including the government agreed that there was no "magic bullet" to solve obesity.

"And yet when it comes to this particular strategy what they want is evidence that this is a magic bullet, that if it is implemented childhood obesity will go down because of it."

He said the call for evidence was a way to delay the inevitable.  

"If we wanted that level of evidence to do anything about childhood obesity we would be sitting on our hands for a very long time, so it is inappropriate to call for magic bullet evidence for one strategy and then have 22 other strategies which have far less evidence backing them up."

The Green Party spokesman for health Kevin Hague said unless action, including a soft-drink tax was taken, the health system would be swamped by obesity-related illness. 

He said one in five people in New Zealand over 15 years of age had diabetes or pre-diabetes and more than $2 billion a year would be needed just for diabetes treatment by 2021.

"The magnitude of the problem requires not only urgent action by the government but dramatic action." 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 - Stuff

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