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Taxing the World Out of Obesity

Taxes on sugary beverages have become a popular approach for countries looking to reduce overweight and obesity. But it is a problem that will require more than one solution.

Written by Andrew Green, Sophie Cousins Published on Read time Approx. 4 minutes
Mexico has been at the forefront of efforts to tax sugar-sweetened beverages. Omar Vega/LatinContent/Getty Images

The cost of soda is about to go up in South Africa, which means people’s weight may soon be coming down. After 22 months of discussion, the South African government introduced an excise tax in December on most sugary drinks sold in the country. The price hike – an average of 11 percent – is scheduled to take effect in April.

Taxes on sugar sweetened beverages have quickly become the most prominent strategy in the global push to reduce overweight and obesity, as well as linked noncommunicable diseases (NCDs) that include diabetes and cardiovascular disease. South Africa is just the latest in a growing list of countries that have adopted the approach. That list includes a range of both developing and developed countries – Mexico, Mauritius and even cities in the United States – reflecting just how universal concerns over overweight and obesity have become.

Experts are quick to caution, though, that taxes on sugary beverages alone are not a panacea. So even as they applaud the rising price of soda, they are also pushing for a suite of interventions that include warnings on labels, restricted marketing to children and replacing those unhealthy options – including sugary drinks – with more nutritious alternatives.

An Easy Win

Taxes on sugary drinks have been endorsed by the World Health Organization (WHO) and are now being championed by members of a new global task force of bankers and finance ministers set to consider fiscal policies to improve health.

The appeal of the approach is straightforward. The beverages offer virtually nothing in the way of nutritional value, but contribute significantly to rising rates of obesity and diabetes. There is a growing body of evidence to show that a tax reduces the consumption of these beverages. At the same time, it offers an additional revenue stream for governments, along with long-term economic benefits.

In South Africa, where diabetes recently became the country’s second-biggest killer, “there was a recognition of the economic burden that obesity and diabetes is causing,” said Sandra Mullin, the senior vice president of policy, advocacy and communication at Vital Strategies. Her organization provides support to governments looking to introduce proven public health strategies. “It’s a way of saving money on health costs.”

Mexico has been at the forefront. Mexicans drink an average of 180 liters of soda every year, according to one local civil society organization and research published in 2016 showed that nearly 70 percent of added sugar that Mexicans consumed came from sugar-sweetened beverages. At the same time, the country is contending with astronomical rates of obesity, reaching 71 percent among adults and 30 percent among children and adolescents.

To encourage people to cut back, the country introduced a tax in 2014 of an additional peso per liter on nondairy and nonalcoholic drinks that have added sugar. Purchases of the taxed beverages dropped 5.5 percent in 2014 and 9.7 percent in 2015, according to research published in Health Affairs. Now experts are watching to see if that translates into health gains.

As more evidence emerges to bolster the argument for taxes on sugary drinks, more countries are looking to get on board.

“Every day there are more countries considering it,” Dr. Leo Nederveen, a technical officer in the WHO’s department of prevention of noncommunicable diseases, told News Deeply. The interest has grown so strong that the WHO is actually producing an implementation manual, which should be out in the next three months, to help guide governments through the process.

Nutrition experts are doing everything they can to encourage the trend, helping countries model the economic benefits and taking advantage of the rollout of the taxes to educate consumers about more nutritious alternatives to the taxed items. But they are also realistic about how much the taxes can accomplish.

A Suite of Services

“Taxes are an effective way of reducing intake, but by themselves they won’t be the solution,” said Dr. Carolina Batis. A researcher with the Health and Nutrition Research Center at Mexico’s National Institute of Public Health, she has been at the forefront of evaluating the impact of Mexico’s tax on sugary beverages. “Sometimes people expect really large reductions,” but countries like Mexico have shown there are limitations. While that country’s tax on sugary drinks has had an impact, it has reduced consumption by only 7.6 percent.

“Some people criticize and say that’s not enough, but you cannot expect a reduction of half when it’s an 8 percent tax,” she said. “I think it’s a strategy that works, but it has to be part of an integrated set of policies.”

Policies that include, for instance, excise taxes on additional high-calorie, low-nutrition products. In addition to its tax on sugary beverages, Hungary hiked prices on nonstaple food products that presented proven health risks starting in 2011. That included items like fruit jams, bakery products and biscuits. Within a year, the purchase of those items had fallen by an average of 27 percent.

Taxes on food can be more complicated to implement than those on sugary beverages, though. It requires governments to evaluate a range of products based on different nutritional measures and then categorize them.

Experts are also pushing other strategies that draw on the earlier efforts to reduce smoking. That includes putting warning labels on packaging and restricting marketing, especially for specific consumers.

“We need to prevent advertising aimed at children,” Dr. Jesús Felipe Gonzalez told News Deeply. Gonzalez is the director general of Mexico’s National Centers for Disease Prevention and Control. “It’s hard to convey the number of calories children should eat because cereal boxes distort information.”

These strategies have not received as much interest as taxes on sugary drinks, in part because the evidence of their impact is more difficult to attain and pass on to governments and because they don’t represent revenue streams to governments.

“Prices are pretty straightforward,” Batis said. “We can do models and see changes in prices and consumption. With other policies, there is not a way to model that kind of behavior.” That doesn’t mean, she said, that experts shouldn’t keep pushing them, though.

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