Soft drink; the base to most of our favourite alcoholic beverages, a kids’ birthday party treat and an Australia Day staple. How unaustralian would it be if the federal government decided to tax an Aussie essential? Fortunately for us, this has not happened (yet), however with the UK implementing a ‘Sugar Tax’ on all soft drinks, will Australia see the results and follow suite?
As of the 6th of April 2018, the UK implemented a tax officially called the ‘Soft Drinks Industry Levy (SDIL)’, in which manufactures of soft drink were taxed based on the amount of added sugar in their products. It was then up to the manufactures whether or not to pass this levy onto their consumers. The main reason for this levy was to help decrease the child obesity and overweight level in the UK, which was sitting at a massive 22.6% for children aged 4-5, and 34.3% for children aged 10-11 in 2017.
Once the Levy was announced in the UK’s 2016 budget, most businesses affected started taking action in reducing their added sugar. Companies such as Lucozade Ribena Suntory announced that by the July 2017, all of its drinks would have less than 5g of sugar, meaning that they would be below the threshold and exempt from the levy. Furthermore, with companies decreasing the added sugar in their drinks (whether that be below the threshold or just decreasing the added sugar in general), the predicted revenue decreased as the 6th of April approached.
So far, we can agree that the levy has been effective in decreasing the amount of added sugar in soft drinks. However, has it been successful in helping decrease the child obesity and overweight level?
The short answer, no.
The longer answer, still no, but let me give you some background information. There has been no evidence (in the UK) to suggest that the decrease in added sugar has led to a decrease in child obesity and overweight level. If there were a decrease in the individuals’ BMI, it was due to a change in lifestyle and eating habits. There has been a lot of backlash as well, mostly from individuals who believe there are alternative ways to decrease the obesity and overweight level. These ideas include decreasing the cost of ‘healthy alternatives’ at fast food chains, implementing heathier options at the school canteen and adding additional physical education into the schooling system. Additionally, overall consumption of the soft drinks didn’t diminish either. There was a small ‘dip’ in the market when the tax was initially implemented, but the market recovered almost instantly.
Now taking all of this into consideration, let’s have a look at how Australia views the implementation of a sugar tax. Back in January of 2018, the spokesperson for Health at the time, Minister Greg Hunt, said that he and the Federal Government did not want to be responsible for increasing the average grocery bill of Australian families. Additionally, Deputy Prime Minister at the time, Barnaby Joyce, encouraged us to ‘go for a run and not in the direction of the ATO’ even though the majority of the Australian public are in favour of a ‘sugar levy’.
This isn’t a surprising response to the levy from our Federal Government, considering (so far) it hasn’t achieved its initial goal of decreasing the child obesity and overweight level. As mentioned before, there are many different ways in which childhood obesity could be tackled, some of which have already been implemented into the Australian Schooling system. These include a restriction on what foods can be sold at the school canteen and banning ‘junk food’ advertisements.
Overall, it seems like we will be keeping our Australia Day staples and birthday party treats tax free for now. Given, the only effect the levy had in the UK was decreasing the added sugar in drinks, a legislation could have been implanted instead of a tax and a similar outcome could have been achieved. For now, enjoy that Rum & Coke and savour your Sprite before we have another leadership spill, and everything changes! But that’s a story for another day.