PM rejects 'fat tax'

HAMISH RUTHERFORD
Last updated 12:35 16/04/2014
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John Key is unconvinced of the merits of a "fat tax" on sugary drinks, predicting the price of Coca-Cola would have to go up "a lot" before it would affect sales.

The prime minister also revealed he drank only low-calorie "light" beer when on holiday in Hawaii.

He predicted similar versions would become available in New Zealand as industry adjusted to changing consumer needs.

Key addressed the launch of the Wellington chapter of Entrepreneurs' Organisation (EO) this morning.

He fielded questions on the damage done by obesity, and whether he would impose a levy on imported products with high sugar levels to encourage a move to more healthy options.

The New Zealand Medical Journal reported in February that a 20 per cent tax on sugary soft drinks would prevent 67 deaths from cardiovascular disease, diabetes, and diet-related cancers per year.

While Key acknowledged that obesity and type 2 diabetes were a major problem in New Zealand, especially among Maori and Pacific Island communities, he did not believe a tax would work.

The question on a tax on sugary products was how much the price would have to increase before it had an impact on sales, Key said.

"How much will it stop people actually buying those products?"

Despite increases in excise tax on tobacco products leading to "quite ferocious" prices, people were still smoking, although smoking rates were falling, he said.

"If you put up the price of a bottle of Coke by 50 cents a bottle, how elastic would that be? I suspect the answer would be, not that elastic," Key said, adding that the price of Coke would have to climb "a lot" before it affected sales.

"I just don't think slapping a fat tax on sugary drinks is going to fix the problem."

Key revealed that he drank low-calorie beer when he was on holiday in Hawaii.

"When I go away ... I never drink anything other than light beer ... Over there any brand you can buy has a light version, Heineken light, Corona light, all sorts, so you can see the consumer has started to demand light-calorie versions."

Two major New Zealand breweries, Lion and DB, had discussed plans to bring new low-calorie varieties to New Zealand with him.

Food group Goodman Fielder had recently told him about steps to cut down the sugar and fat content from products such as tomato sauce.

This was a sign that companies were adjusting to changing demands irrespective of taxes, Key said.

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