An alliance of associations is calling for a 20% sugar tax to be applied to beverages to discourage consumption, arguing in a Position Statement presented to regulators in Canberra this week that such an approach will deliver a public health outcome and put Australia in line with UK, Mexico and South Africa, which have all adopted a sugar tax.  The proposal has been labelled as misguided and short sighted by the Australian Beverage Council which points to the significant strides made in reducing sugar content in traditional beverages and the broader shifts to a variety of low and no sugar beverages.

Time to Tax Sugary Drinks, says Rethink

The Policy Statement, launched by Rethink has resulted in another round of discussion over where the responsibility for personal choice starts and what role governments have in determining consumption patterns of citizens.

Arguing for a substantial tax, Rethink points to health outcomes as a reason for the government to get involved.

AMA President Professor Steve Robson said the research also showed the policy could slash the amount of sugar Australians consume every year by nearly 2.6 kilograms per person, which is approximately 650 teaspoons of sugar.

“This policy really is a no brainer — it would raise vital funds for preventive health and protect Australians’ health by decreasing the risk of diseases linked to excess weight like heart disease, type 2 diabetes, stroke, and some cancers,” Professor Robson said.

“Our modelling shows that a 20 per cent health levy on sugary drink manufacturers could raise around $4 billion over four years. These funds could be invested into crucial health promotion campaigns, reducing pressure on our stretched health system.”

Dr Angie Nilsson, Federal Board Director at Australian Dental Association, added that over time the policy would also improve health equity and dental health in Australia.

“We know that just one 600mL bottle of soft drink can pack a shocking 16 teaspoons of sugar and is highly acidic. Frequently gulping down sugary drinks can increase the risk of issues including tooth decay, sensitivity and erosion.”

“Looking to countries that already have a health levy, like Mexico, it’s clear that this policy can have a positive impact on population smiles as well as diets, with the greatest dental health benefits likely to be experienced by Australians from lower socio-economic backgrounds.”

Misguided and short sighted, says Industry

The Australian Beverage Council has responded to the Rethink call by labelling it misguided and short sighted.

Pointing to the current industry initiatives, including the Sugar Pledge that is a proven program that is having an impact, and the already declining sugary beverage consumption rates.

“The tax is a misguided attempt to address complex problems like obesity with a simplistic, quick fix that lacks real world evidence it has any discernible impact on weight. Consumption of sugar from drinks in Australia has decreased significantly over a 20-year period at the same time obesity, overweight and diabetes rates have continued to rise. Clearly soft drinks aren’t driving the nation’s expanding waistline which makes this call for a tax illogical and clearly just a revenue raiser” said Geoff Parker, CEO of the Australian Beverages Council.

“This type of discriminatory tax will only add pressure to household budgets at a time when most families are struggling with soaring cost of living pressures. The introduction of any sugar tax will have significant impacts on small and family businesses, from retailers to farmers and particularly in rural and regional areas of Australia. Tax policy should not be made up without consultation, without any significant economic impact analysis, including whether it will achieve its goals and how it would affect businesses. We urge the Government to invest in education, highlighting the need for healthier choices and more exercise. We don’t believe Australia can tax its way to a healthier society. The responsibility lies with everyone, and education is the key.” said David Stout, Director of Policy at the National Retail Association.

“While some countries have implemented taxes on drinks, there has not been a single example where these taxes have lowered the rise of obesity, overweight or diabetes. This is why some countries including Australia are looking at a more wholistic, contemporary approaches to obesity and overweight,” said Parker.

In 2018 the Australian Beverages Council along with the nation’s largest non-alcoholic drink companies announced Australia’s first Sugar Reduction Pledge – a commitment to reduce sugar across their portfolios by 25% from 2015 to 2025. As of 31 December 2022, pledge signatories had reduced sugar across portfolios by 18%. This significant progress shows an industry that is responding with speed and scale to Australians’ desire for more choices with less sugar.

“The reduction in sugar has been achieved without price hikes to the weekly supermarket shop or making buying a drink more expensive when people are out and about. Since 2015 bottled water sales has outstripped sugar-sweetened carbonated soft drink sales and since 2022 no and low sugar drinks have accounted for more than half of all drink sales. This reinforces published peer reviewed research on more than two decades of drink consumption in Australia which revealed a long-term shift in Australians’ non-alcoholic drink choices over the period, including that Australians now drink almost five times more bottled water than they did two decades ago. Australians are making healthier choices for them and their families without another tax on their household budget,” said Parker.

“The drinks industry will continue to support consumers with more choices and less sugar. We urge other sectors to play their part and commit to their own reductions in sugar, saturated fat and sodium. In 2024 we need a whole-of-industry commitment to playing its part along with government in addressing this complex problem,” said Parker.

What now?

While it is not clear exactly which beverages and which situations the proposed Rethink tax would apply, what is clear is that this debate will continue.

Elisha Radwanowski BCom(HRM&IR)