The Australian convenience and beverage industries have responded to the UK Government’s announcement it will impose a levy on soft drinks with more than 5g of sugar per 100ml, amid calls by local health groups for similar legislation in Australia.
Last week the UK Government announced it will introduce a soft drinks industry levy, to be paid by producers and importers of soft drinks that contain added sugar from April 2018. Under the provisions, smaller operators will be exempt from the tax.
The levy will be charged on drinks according to their total sugar content, with a main rate charge for drink above 5 grams of sugar per 100 millilitres and a higher rate for drinks with more than 8 grams of sugar per 100 millilitres. In its announcement of the new tax the UK government stated that if a success it could be extended to other categories.
Major manufactures in the UK are now reportedly considering legal action against the UK Government. In Australia, health groups are pushing for similar regulations to be imposed, with the Obesity Policy Coalition calling for a 20 per cent levy to be implemented on sugary drinks.
“Evidence from other countries that have implemented similar taxes shows that consumers are sensitive to the price of sugary drinks and this directly impacts demand – it is a very powerful policy tool,” Jane Martin, executive manager of the Obesity Policy Coalition, said.
Ms Martin said a tax based on sugar levels as outlined in the UK would encourage local beverage manufacturers to reformulate their products to reduce the sugar content.
“Increasing the price of sugary drinks is an important element of a comprehensive and coordinated set of policies to address obesity. This should also include restrictions on unhealthy food marketing to children, an education campaign to highlight the health effects associated with sugary drinks and mandatory Health Star labels on food packaging.”
Australian Beverages Council CEO, Geoff Parker, said there was no evidence globally that a soft drink tax has any impact on obesity rates.
“European countries, like Denmark, have introduced and subsequently repealed a ‘fat’ tax within 18 months, due to its blatant ineffectiveness. When implemented in Mexico, the tax only reduced dietary intake by six calories.
“Soft drinks can absolutely be enjoyed in moderation. Food and beverage consumption is a personal choice, not a revenue raiser.”
Australasian Association of Convenience Stores (AACS) CEO, Jeff Rogut, says there is no rational basis to suggest introducing taxes on certain products will result in improved health outcomes and reinforced the financial burden that emotionally charged legislative responses can place on businesses and indeed some consumers.
“We would encourage any inquiry to remain mindful of the fact that the only available evidence suggests that education, potentially in the form of wellness and awareness programs, is the most effective way to achieve improved health outcomes,” Mr Rogut said.
“We also encourage dialogue with retailers, manufacturers and consumers to see what practical ideas may be put forward rather than jumping to the last resort of taxes,” he said, adding some companies have already taken action and others continue to develop healthier alternatives.
Mr Rogut said that if introducing a tax on soft drinks is to be pursued, logic suggests it would have to encompass all sweetened drinks such as flavoured milk, iced teas, fruit smoothies and otherwise healthy juices.
“The economic ramifications for manufacturers, suppliers and retailers would be immense, yet the potential for such measures to achieve improved health outcomes is unknown.
“Applying tax to certain items because those items have an emotional association to obesity in the minds of some groups is not only flawed, it’s short sighted and lazy,” Mr Rogut said.
“It’s also too big an economic risk for the Australian Government to take in the context of the challenges already faced by retailers and manufacturers in this country.”
John Georges, director of local premium drinks brand Bondi Beverages, believes the tax in the UK is “unethical” and says a ‘sugar tax’ should be applied to all sugar-based products, not only soft drinks.
“The spectrum needs to be widened. Hit doughnuts, chocolate, ice cream and sauces too. It doesn’t make sense, it’s unethical.”
Mr Georges said a tax on soft drinks in Australia could push consumers towards ‘light’ or ‘no sugar’ variants that contain artificial sweeteners which he believes are a greater health concern.
“There are more adverse health risks with artificial sweeteners that the public aren’t being made aware of.”