ON THE RIGHT: Sweet tax about finance and health
Is a tax on sweetened beverages a sustainable policy?
In recent years, various countries have introduced taxes on sugar-sweetened beverages (SSBs) and foods as a public health measure to combat obesity.
Taxes have traditionally been implemented as a means of revenue generation; however, SSB taxes illustrate the utility of taxation as a tool in health policy and one that has the potential to provide tax revenue for non-communicable disease (NCD) prevention and control.
Research on the health related impacts of taxation of sugar sweetened beverages is emerging and the evidence points to positive changes in consumption patterns as recently seen in Mexico where a six per cent decline in the purchase of taxed beverages was observed.
Effective August 1, 2015, the Ministry of Finance led the implementation of a ten per cent excise tax on SSBs. At that time, Barbados was among only one of ten countries globally to implement such a tax.
Barbados and the other nine countries (Chile, Finland, France, French Polynesia, Hungary, Mauritius, Mexico, Samoa, and Tonga) implemented the SSB tax as a public health measure to reduce consumption of high sugar content beverages in an attempt to tackle increasingly obesogenic environments driving skyrocketing obesity rates and related conditions including diabetes, heart disease and cancers.
The Barbados SSB taxation policy was explored and implemented within the context of severe fiscal challenges including slow growth in revenues, increasing Government expenditure, and high levels of debt.
The macroeconomic environment in Barbados, though remaining resilient for the greater part of the protracted global recession, continued to show low levels of investment and limited productivity gains.
Many countries throughout the Caribbean faced similar economic challenges including moderate economic activity coupled with long-standing fiscal and banking sector problems, largely unsustainable public debt, accumulation of arrears, and high non-performing loans.
The imposition of the SSB tax was in many respects driven by fiscal conditions, but was given impetus and implemented in an environment in which it was recognised that there was a need to address the consumption of processed, energy-dense, nutrient poor foods and beverages.
Taxation to promote healthy behaviours has been shown to be effective. The World Health Organisation report, Using Price Policies To Promote Healthier Diets, reported that ‘the evidence suggests that price policies applied to food can influence what consumers buy and could contribute to improving health by shifting consumption in the desired direction and supporting healthier diets’.
SSB taxation should be implemented as one component in a comprehensive package of policy and programming interventions. Wide stakeholder consultations, including civil society organisations, should form part of the tax implementation strategy. Policies should be adopted and mechanisms developed to earmark tax revenue for NCD prevention and control.
Effectiveness of SSB taxes should be monitored and evaluated, and adjustments made to tax levels accordingly.
Consideration should be given to the extension of the taxes beyond SSBs to unhealthy foods, such as those high in sugar, fat and salt.
National NCD Commissions or equivalents provide platforms for sensitisation of stakeholders in the beverage industry of the adverse public health impacts of high sugar diets and the potentially significant health and economic gains to be made by companies which lead the way in reducing sugar content of their locally produced beverages.
More research is needed to explore the sociocultural and economic factors that drive behaviours which lead to overweight and obesity throughout the life-course.