A Small Victory on the Global Spread of Soda Taxes
June 15, 2018
Earlier this month, an independent panel advising the World Health Organization (WHO) defied expectations. Instead of recommending that nations across the globe tax sugary drinks, the panel stopped just short, due to pressure from the United States.
The WHO Independent High-Level Commission on Noncommunicable Diseases was charged with providing suggestions on how to reduce premature deaths from diseases, such as diabetes, heart disease, and obesity. One such idea, pushed by many countries and the WHO itself, was a tax on sugary drinks, following the models created by Mexico, France, and Britain.
However, the Trump administration argued against recommending the tax, as the research has demonstrated that these type of taxes are ineffective.
We at the Tax Foundation have written often about the flaws of taxing sugary beverages. As it turns out, while sugary drinks can have negative health benefits if you drink too many, so can a lot of other things. A study done in 2010 by Yale economist Jordan Fletcher showed that young people (for whom money is more of a factor) do in fact switch away from soda when soda is taxed, but they instead replace it with other potentially unhealthy options.
This was not a one-off study. In 2017, researchers at the University of Massachusetts explained why taxes are incapable of hindering overall caloric consumption. Like the Yale study, they showed that people could just get their sugar elsewhere.
They also deflated the argument that the sugar-based taxes are like cigarette taxes. Cigarette taxes increase the price by a much more significant amount, a price hike that could not be justified on sugary drinks because they are safe in moderation, unlike cigarettes. Another major point was that, again, sugary drinks can easily be replaced by another way to get sugar, whereas cigarettes have far fewer options for replacements.
The fight at the WHO is not over. A spokesman for the WHO said the WHO still “stands by its evidence-based guidance, including on the benefits of using fiscal policies to reduce exposure to harmful products, including sugar-sweetened beverages.” And WHO Director General Tedros Adhanom Ghebreyesus stated that WHO’s view “cannot change because of this report. What WHO said some years ago holds, because consumption of sugar is associated with obesity and at the same time, taxing sugar was shown to reduce consumption in many countries.”
While the administration made the case for the WHO to slow down a bit, jurisdictions in the U.S. and overseas are often adopting these taxes without taking a closer look at the potential policy outcomes. More governments need to realize the limitations in using tax policy to handle complicated social issues.
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