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Should we tax sugary soft drinks?

Sugary Soft Drinks

Obese people are more likely to go to doctors and be admitted to hospital more often than other people. They are also more likely to be unemployed and therefore paying less tax than the rest of the population.  This is the findings from the new Grattan Institute report.  Obesity is a catastrophic public health problem in Australia. More than one in four adults are now classified as obese, a rise of 10 per cent since the early 1980’s and almost 7% of children are obese, up from less than 2% in the 1980’s.

The report concludes, Australia should introduce a tax on sugary drink to help recoup some of the costs of obesity to the community. A sugary drinks tax: recovering the community costs of obesity calls for a new excise tax of 40 cents per 100 grams of sugar, on all non-alcoholic, water-based drinks that contain added sugar. The tax would increase the price of a two-litre bottle of soft drink by about 80 cents, raise about $500 million a year, and generate a fall of about 15 per cent in the consumption of sugar-sweetened beverages, as consumers switched to water and other drinks not subject to the new tax.

The report, to be released at Parliament House in Canberra on Wednesday, calculates obesity costs Australian taxpayers more than $5.3 billion a year. These costs – more taxpayer dollars spent on healthcare and welfare, and less tax raised – are caused by obesity but borne by the entire community. The new tax would help redress that imbalance.

The report stresses that a new tax is not a “silver bullet” solution to Australia’s obesity epidemic – that would require a whole suite of new policies and programs. But the proposed tax would encourage healthier lifestyles.

“Obesity is one of the great public health challenges of modern Australia, and so this is a reform whose time has come,” says Grattan Institute Health Program Director Stephen Duckett. “We target these drinks because most of them contain no nutritional benefit.”

The many countries that already have or are planning to introduce a tax on soft drinks include France, Belgium, Hungary, Finland, Chile, the UK, Ireland, South Africa and parts of the United States.

The report says the Australian government could use the $500 million a year raised by the new tax to reduce the budget deficit or boost healthcare funding, or the money could be spent on programs designed to treat obesity and promote healthy eating.

“How we use the money is a debate for later,” Dr Duckett says. “For now, Australia should introduce this tax because it offers twin benefits: it will reduce the number of people who become obese and it will ensure fewer taxpayer dollars have to be spent on the damage done by obesity.”

Recent Australian modelling suggests a tax could reduce obesity prevalence by about 2%.