Sugar Tax: Will it work, and who does it hurt?

March 20, 2016

Iced Tea Culture

The sugar tax, well the sugary drinks tax. But not sugary juices or sugary milk drinks. Or small producers of sugary drinks. Let’s just call it the Coca Cola tax.

So will it work, and who does it hurt?

Just before I set out a few points to explain why I don’t believe the sugary drinks tax will achieve its stated objectives, I would like to say that I do care about childhood obesity. My concern is that I don’t think this tax will achieve its objectives, and potentially make things worse while adding to the cost of living. I believe education and providing consumer choice is the best long term strategy.

Full disclosure – the soft drink I created (Sweet Sally Iced Tea) is under the sugar tax threshold announced last week, so I don’t have any vested interest in opposing this tax.

While most sin taxes (to discourage consumption) are applied to products we have deemed only appropriate for adult consumption such as alcohol and tobacco – this is the first tax aimed at children. You can buy it kids – but we’re gonna tax you for it!

1. Unintended Consequences

“Will it be better for children if they move to drinks with artificial sweeteners?”

The stated objective of this policy is for children to consume less sugar. This will be achieved by incentivising big producers to reformulate with less sugar and to discourage consumption by price increases.

Are the big soft drink producers now incentivised to reformulate the full sugar versions? Producers will either count on consumers to move seamlessly to the existing diet options, or will reformulate existing full sugar products with sweeteners or other types of sweeter sugar substitutes. And reformulate so they just fall under tax thresholds. So the question remains, if children move to drinks with artificial sweeteners will this be better for them?

When Harvard’s School of public health studied the research on artificial sweeteners they concluded:

“The health benefits of artificial sweeteners are inconclusive, with research showing mixed findings. Diet soda may not be a healthy substitute for sugary soda. For children, the long-term effects of consuming artificially-sweetened beverages are unknown, so it’s best for kids to avoid them

2. A Coke is a Coke.

“In our era of gourmet and artisan products, I can’t think of any other food or drink where this rule applies”

No amount of money, access or power can get you a better coke. This is what I personally love about Coca Cola as a product. I think Andy Warhol said it best:

“Everybody owns a piece of Coke. The richest consumers buy essentially the same things as the poorest.  A coke is a coke and no amount of money can get you a better coke than the one the bum on the corner is drinking. All the cokes are the same and all the cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.”

In our era of gourmet and artisan products, I can’t think of any other food or drink where this rule applies. If you have the money and access, you can always buy a better grade.

Does this tax erode that egalitarian spirit? The fact is that buying an original coke will become proportionally more expensive for the poorest compared to the richest.

3. Why not all producers?

An oddity in this policy, is that it only applies to large producers. It gives small producers no incentive to reformulate.

It also provides an incentive to maintain higher amounts of sugar – as they now have a price advantage against the large producers.

This seems to go against the stated aims and principles behind the sugary drinks tax.

4. Freedom & Consumer Choice

“Education and providing consumer choice is the only long term strategy”

When I created Sweet Sally Iced Tea, I had no desire to create another overly sweetened drink. That’s not because I don’t enjoy a coke from time to time – it was because I saw that consumers are rarely provided with an all-natural soft drink option which sits between water and existing traditional sugary drinks.

Walk into the vast majority of venues across the UK and the consumer is stuck with a choice of overly sweetened soda, sugary juice or water – nothing in between. Sweet Sally Iced Tea falls well under the lowest sugary tax threshold, and provides that consumer choice.

Although I disagree with the tax, one of the positives has been to bring sugar levels in drinks to the public’s attention. The public already knew that an original coke is a sugary drink, but few were aware that other products such as Lemonade, Elderflower Presse, Tonic, and Ginger Beer contain similar amounts of sugar.

Average sugar content in UK soft drinks March 2015

Average sugar content in UK soft drinks March 2015

In this respect, I have welcomed the sugar campaign – my concern is the publicity of introducing the tax is a one off event rather than an ongoing education campaign – it will soon be forgotten as higher prices are added into our cost of living. That’s why on-going education and providing consumer choice is the only long term strategy – and is a much better alternative to an inconsistent and regressive tax.

Thanks for reading and let me know your thoughts.

Sweet-Sally-Iced-Tea-Founder-2015

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