Sugar taxes of various designs are being used around the world in a range of different policy contexts. Those countries that have not yet implemented sugar taxes are under pressure from lobby groups to do so, with claims that the evidence is strong that a sugar tax will improve population health by reducing the intake of sugar.
To be effective at improving health, a sugar tax must be effective across a five-step intervention logic:
• Imposing a tax must increase the price of the targeted item
• The increase in price must lead to a reduction in consumption of the item
• Reducing consumption of the item must lead to a reduction in sugar and/or energy intake
• Lower energy intake must result in lower physiological risk factors
• Lower physiological risk factors must improve health outcomes.
This report provides an assessment of the evidence for sugar taxes as a fiscal instrument to improve health. Forty-seven peer-reviewed studies and working papers published in the last five years were reviewed, summarised and assessed for key methodological issues.
Experience with sugar taxes is complicated by inconsistencies in their design and context. Most sugar taxes apply to sugar-sweetened beverages, but some also include pure fruit juices or other foods with high sugar content. Some are valoric taxes while others are volumetric. Some taxes were implemented alongside other measures to improve diets or increase awareness of the danger of excess sugar consumption.
Sugar taxes are also implemented in some jurisdictions as a means to raise additional tax revenue, with no particular expectation that any reduction in intake will translate into health benefits but sometimes with revenues being earmarked for health programmes.
In our review of the literature, we find that:
• Taxes do generally appear to be passed through to prices and some reduced demand is likely
• Estimates of reduced intake are often overstated due to methodological flaws and incomplete measurement
• Price elasticities from early studies with fundamental methodological flaws have later been used in a number of other studies to assess the impact of sugar taxes, resulting in significantly overestimated reductions in demand
• There is insufficient evidence to judge whether consumers are substituting other sources of sugar or calories in the face of taxes on sugar in drinks
• Studies using sound methods report reductions in intake that are likely too small to generate health benefits and could easily be cancelled out by substitution of other sources of sugar or calories
• No study based on actual experience with sugar taxes has identified an impact on health outcomes NZIER report -Sugar taxes ii
• Studies that report health improvements are modelling studies that have assumed a meaningful change in sugar intake with no compensatory substitution, rather than being based on observations of real behaviour.
The evidence that sugar taxes improve health is weak.