The AMA has proposed Australia implement a sugar tax of A$0.40 for every 100 grams (per unit). The offered tax rate would result in a tax of A$0.16 on 375ml of Coke containing 40g of sugar (10.6g/100ml).
This tax rate is in line with the global recommendation that at least a 20% price increase would be needed to produce a significant health effect.
Price increases encourage consumers to opt for healthier alternatives, such as bottled water. Shutterstock
The proposed AMA design is also in accordance with evidence from international sources, which shows that sugary drinks are best taxed when the rate is based on sugar content.
This tax can encourage people to switch to healthier substitutes (lower in sugar) while also encouraging manufacturers to reformulate products (lowering sugar content) in order to avoid a high tax rate.
The UK, for example, has demonstrated success using a tier system in which products with sugar content above certain thresholds are subject to higher tax rates. The UK tax led to a decrease in consumption as well as impressive reformulation.
Read more: Sugary drinks tax is working – now it’s time to target cakes, biscuits and snacks.
The products to be taxed under the AMA proposal include all non-alcoholic drinks containing free sugars but exclude 100% fruit juice, milk-based drinks, and cordial glasses.
Practical decisions like this will likely reduce resistance to taxation by food industries (such as fruit growers and dairy producers).
Impact of a Sugary Drinks Tax in Australia
The AMA estimates that the proposed tax will lead to a 2% decrease in obesity, a reduction in sugar consumption, and improved diets.
Modelling showed that over 25 years, this would lead to 16,000 fewer type 2 diabetics, 4,400 fewer cases of heart disease and stroke, as well as 1,600 fewer deaths.
Read more: Australian sugary drinks tax could prevent thousands of heart attacks and strokes and save 1,600 lives.
These health benefits would translate to healthcare expenditure savings of between A$609 million and A$1.73 billion.
The AMA estimates that the tax could raise around A$800,000,000 in government revenue each year. These revenues could be used to fund preventive health programs.
Support for Sugary Drinks Taxes Gains International Ground
Sugary drink taxes are gaining momentum around the world.
In more than 45 countries, sugary drinks are taxed. These taxes were implemented mostly in the past five years.
Mexico is one of 45 countries that have implemented sugary drink taxes. Shutterstock
Australia has been a leader in the prevention of health issues for decades, thanks to its strong efforts in tobacco management. However, in recent years, it has fallen behind by a long way when it comes to efforts in addressing unhealthy diets.
Arguments against taxing sugary beverages
The food industry regularly parades a range of arguments in opposition to sugary drinks tax. has thoroughly debunked their arguments.
Read more: Don’t believe the myths – taxing sugary drinks makes us drink less of it
For example, the food industry has argued a sugary drinks tax would leave disadvantaged people poorer.
But rigorous research indicates that lower socioeconomic groups will likely benefit from the tax in a disproportionate way.
The industry has also claimed that sugar producers will lose their jobs.
According to the AMA report, a tax on sugary drinks in Australia will have a minimal impact on Australia’s sugar industry. This is due to the fact that around 80% of Australia’s sugar production is being exported.
It’s time to put corporate profit before health.
The Australian government has put corporate interests before population health by failing to introduce a tax on sugary drinks.
In Australia, the implementation of a tax on sugary drinks is inevitable. There is strong evidence that shows the benefits and a large amount of public support.
It’s only a matter of political leadership that acknowledges the importance of prioritizing the health of consumers over the profits of multinational soft drink manufacturers.
