Taxing sugar: a sweet idea that will quickly turn sour

Tony Hockley, 27 October 2015

In its advice to Government Public Health England (PHE) argued for a tax on sugar. It claimed, rather limply, that this might be effective “in the short term”. Given that taxes are rarely reduced or abolished, if the best evidence is only of short-term effect then fiscal measures are unlikely to be the best course of action.

The real attraction of a sugar tax is that is seems obvious that a price hike will reduce consumption. A simple argument, but like so many simple arguments it is probably wrong. When it comes to public health measures the risk is not just that people will be paying a bit more, but also that it will cause more harm than good. Until we have evidence that this will not be the case a sugar tax should not be part of any strategy to tackle obesity.

In seeking to tackle smoking John Reid, the Labour health minister, argued that policymakers needed to empathise with those for whom smoking was “their only pleasure”. Tobacco taxation was employed as the main policy tool for decades, and its greatest effect was to create a divide between the wealthy, who responded to the tax and public health campaigns, and the poor, who continued to smoke. The blunt tool of taxation made no allowance for the different values attached to smoking by different people, or for their different capability to indulge in other activities in order to compensate for the loss of a “pleasure”.

Policy comparisons between tobacco and sugar are very weak. Tobacco consumption is optional and harmful, sugars are an important part of our natural diet. Tobacco is addictive, sugars are not. Action on levels of sugar consumption requires a much stronger evidence base to demonstrate that policy interventions will do more good than harm, and within a much more complex environment.

The research cited to justify the PHE proposal highlights that the risks from compensatory behaviours in response to a sugar or soft drinks tax are unknown; so that any health gain is diminished or lost. Knowledge of such behavioural responses is crucial to policy design in nutrition.

If high sugar products are considered a “treat” a compensatory behaviour to an effective tax is highly probable. Withdrawal of affordable access to one treat will usually by recourse to another, hence the well-established “fat-sugar see saw”. It is largely unknown whether, for example, a high-sugar soft drink would be replaced by confectionary or by an alcoholic beverage. A small soft drink could be replaced by a larger alternative, replacing perceived quality with quantity.

Secondly, payment of the tax may increase perceived value, turning sugar from a basic product to a luxury. A higher price may actually increase attachment to a product for some people and enhance its status as a treat. Tax payment can create a “moral licence”, which creates a right to consume the targeted product.  In the same way many drivers believe that they have bought the right to pollute, air passengers the right to fly, and smokers have paid for future NHS treatment costs.

Thirdly, the elevation of sugar to the status of prime suspect for rising obesity, with a simple sales tax as proposed by PHE could generate a silo effect. Sugar and obesity would be directly linked in people’s decisions, and other factors excused. A simple solution suggests a simple problem.

Finally, tackling obesity requires long-term behavioural change. If a tax changes behaviour at all, it tends to have a declining effect over time. In response the tax needs continuously to be increased in order to maintain any effect. As the tax becomes more punitive it becomes vulnerable to problems around self-determination. Consumers who feel controlled will have reduced intrinsic motivation to pursue the behaviour change that is being pushed. As the level of the tax increases then the perception of it would shift from an obesity measure to a tax-raising measure. Eventually all impact on intrinsic motivation is lost.

Much has been achieved since the 1970s in improving the British diet. A simplistic approach now to tackling sugar intake could do far more harm than good.

Tony Hockley is Director of the Policy Analysis Centre and teaches Behavioural Public Policy at the London School of Economics & Political Science (LSE). He is a former Special Adviser at the Department of Health