The Australian Medical Association has again requested a sugary drink tax in Australia. The proposed tax is a part of the blueprint by the AMA to make Australia the most health-conscious country in the entire world.
Dr James Muecke, 2020 Australian of the Year, has been a strong advocate for a tax on sugary drinks.
It follows years of advocacy by public-health groups and think tanks that have long argued the benefits of a tax on sugary drinks for Australia.
What does the evidence say?
A sugary drink tax has consistently been identified as an important part of efforts to improve diets and reduce obesity.
There is strong proof that sugary drinks can have a number of negative effects on health, including tooth decay, excessive weight gain, and an increased risk of obesity and type 2 diabetes.
Evidence from around the world shows that sugary drinks are taxed in an effective way to reduce consumption.
Evaluations show that taxes on sugary beverages lead to an increase in the purchase of non-taxed drinks. These effects persist for many years.
What is the best tax structure?
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 a can of Coke containing 40g of sugar (10.6g/100ml).
This tax rate is in line with the global recommendation that a price increase of at least 20 percent is 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 (lower in sugar) in order to avoid a high tax rate.
The UK, for example, has demonstrated success using a tiered tax system, in which products with sugar contents above certain thresholds are subject to higher rates of tax. 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 beverages, 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.
Modeling showed that over 25 years, this would lead to 16,000 fewer types of people with diabetes, 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 in large numbers over 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 addressing unhealthy diets.
Arguments against taxing sugary beverages
The food industry regularly parades a range of arguments in opposition to the sugary drinks tax. But has thoroughly debunked their arguments.