Recently a report has been released considering the increasing amount of sugar in the average diet, and the problems that it induces in regards to health and especially obesity.
The report outlined that a tax between 10% and 20% would be the most effective, while also stopping supermarkets from offering special deals. The idea is to effectively price people out of consumption. The report outlines how this has worked in Mexico, which implemented a 10% tax on sugar based drinks, resulting in a reported 6% decrease in sales.
This can be viewed as a conventional case of a negative externality. As the costs that arise from these drinks are not integrated into pricing. This is due to the increasing cases of diabetes in developed countries, as well as the adverse health affects caused by sugary drinks as well as the no sugar substitutes.
The British Medical Association recommended adopting the measures in the report, but the Food and Drink Federation director stated “we do not agree that international evidence does not supports the introduction of a sugar tax”.
Now cynicism obviously points towards the fact that some friends of government ministers are not keen on such taxation. Let alone the fact that it would effectively be waging war over huge corporations such as Coca-Cola.
Aside from the issues in resolving this, it is interesting to look at consumer relationships with addictive products that are legal. While there is a wealth of information that supports the negative impact of sugar it is largely ignored by consumers. Similar to when the adverse effects of cigarettes had only started to be revealed.
The question I often face in these areas is should the government be managing our lives in these scenarios. While my usual answer is no, one has to take into consideration the fact that it is a burden on public healthcare services, which each taxpayer contributes to. The prevalence of Type-2 diabetes in the U.K. is indicative of resources being redirected to deal with diagnosis and treatment. This is a problem that can clearly be reduced by putting this tax forward as a starting point. While high sugar content in foodstuff can make that particular food addictive, causing similar problems.