Genevieve Joy is a graduate of the LSE MPA, where she studied Public and Social Policy. She has six years of experience in research, communications and project management with a focus on food security and sustainable development.
Genevieve’s paper, Will the proposed UK soft drinks tax be effective? is published in the 2017 edition of The Public Sphere, available to read online here. This piece is part of a series of articles contributed by authors featured in this year’s issue.
In November 2015, I read an article recounting Mexico’s battle to implement a soda tax. The story laid bare the scale of the obesity epidemic in Mexico, the Goliath-like power of industry interest groups, and the need for committed political will to push through such a tax. I was interested by claims that the tariff had caused a 6 per cent drop in soda consumption and curious about how causal the link was between soda tax and consumption, and the link between soda consumption and obesity.
At the same time, the United Kingdom was considering a soft drinks tax of its own. The 2016 Budget, unveiled in March 2016, included plans for a levy on soft drinks producers and importers to be implemented two years later. With the evidence of Mexico’s success mounting, and a rising global trend of these taxes, I was interested to study whether this was an effective way to reduce obesity. The UK would be my test subject.
Excessive calorie consumption is a major driver of obesity and soft drinks are a major source of excess calories, so I formulated six hypotheses that would have to be true for the tax to be effective in reducing obesity:
- Hypothesis 1: Lower soft drink consumption will reduce obesity
- Hypothesis 2: The tax will be passed onto consumers
- Hypothesis 3: Soft drink consumption is price-elastic
- Hypothesis 4: The tax structure will encourage companies to produce lower-sugar soft drinks
- Hypothesis 5: The tax structure will push consumers toward lower-sugar beverages
- Hypothesis 6: There is low cross-price elasticity between soft drinks and other high-calorie products
By testing these hypotheses using literature and case studies, I found that lower soft drink consumption would indeed reduce obesity and associated diseases, such as type 2 diabetes. Analysis of soft drinks taxes in other countries indicate that the tax is passed onto consumers, most likely in full; which has led to soft drinks sales falling by 8–10 percent.
With respect to producers, they are already manufacturing lower-sugar soft drinks to appeal to more health-conscious consumers and it is likely that they will expand this offering to avoid the tax. Through these financial incentives and a wider variety of low-sugar and sugar-free options, plus marketing and education that will undoubtedly exist around the tax, consumers are likely to shift consumption away from sugary soft drinks.
Finally, it is unclear whether consumers will switch from soft drinks to other high caloric foods. I therefore recommend that parallel supportive policies be implemented, such as increased access to water in schools, expanded nutritional education, and clear labeling of nutritional values on food and beverages.
Although every country is different, and causality is difficult – if not impossible – to establish, my research suggests that the proposed levy will be effective in reducing sugary soft drink consumption and beneficial to the health of UK citizens. Although there is no single product to blame for the rising obesity epidemic around the world, there is a strong argument in favour of reducing soft drink consumption as a viable way to reduce obesity. Soft drinks are high in calories and low in nutritional value; excessive consumption of them is associated with higher body mass index, type 2 diabetes, and tooth decay. And, as well as acting as a disincentive for consumers to purchase the drinks, the tax also allows the government to raise funds for healthy initiatives such as school sports and after-school activities. As part of a full package of comprehensive and consistent policies, I expect that the proposed soft drinks levy will be effective and beneficial to the health of UK citizens.