Several countries have considered introducing or have introduced a sugar tax for certain items such as soft drinks. The reasoning behind this tax is that there are numerous health concerns associated with sugar consumption, such as obesity or diabetes. As today’s world becomes more digital, there are greater incidences of sedentary lifestyles, even among children, which increases these risks. Moreover, many consumers, including Swiss consumers are expressing concerns regarding “the negative health consequences of excessive sugar intake” (Euromonitor International). Debate regarding the concerns held regarding sugar intake, leading to the sugar tax, is expected to lead to reduced sugar consumption, which will, in turn, lead to better health.
The greatest reduction in sugar consumption is targeted towards children and advocated stringently by the World Health Organization (Gelski). The sugar tax, therefore, is designed to promote positive health, as well as offset costs associated with health conditions that can be prevented or reduced through reduction of sugar consumption. As such, the sugar tax is an example of a Pigouvian tax and set based on negative social costs (Rosenkrane and Schmitz). As a Pigouvian tax, the sugar tax has the potential to provide benefits to consumers, yet also ‘penalizes’ consumers for the consumption of sugary drinks.
Although the World Health Organization argues that the sugar tax would lead to health benefits, other studies, such as the one conducted by the American Beverage Association, argue that the sugar tax in Mexico resulted in a 4.9 calorie reduction per day, further arguing that this amount cannot be measured on a scale (Gelski). Thus, opponents to the sugar tax note that there is insufficient reduction in sugar consumption, suggesting that the sugar tax has limited, if any, impact on reducing sugar consumption. Moreover, opponents of the sugar tax argue that sugar consumption from sugary drinks has decreased by 39% in the past 18 years (Gelski). However, even if there is no real measurable impact on sugar consumption and impact on health concerns, consumers are still expected to pay the tax, which causes them to pay more for the product.
If, in fact, there is limited impact on sugar consumption, the sugar tax, as a Pigouvian tax, serves to decrease government expenses related to negative side effects, such as treatment for obesity and rising health care costs. It is suggested that the Pigouvian tax offsets the negative social cost, which brings equilibrium back to the economy (Fleischer). Proponents of the sugar tax cite the tobacco tax as an example as to success within the implementation of Pigouvian tax (Bittman). However, while tobacco use has decreased, it is also recognized that cancer caused by tobacco is still a significant problem worldwide. The sugar tax has similar variances in outcomes. For example, in Hungary, the sugar tax was implemented in 2011. Since that time, sugary drink consumption has reduced by 19% (Purdy).
Overall, it has been shown that the introduction of a sugary tax, while a sound idea, does not yield the anticipated benefits. While some reports show that sugar consumption is reduced as a result of the sugar tax, this assumption is not wide-spread. In fact, there are concerns regarding the negative impact of the sugar tax. For example, prior studies show that consumers will continue to purchase sugary drinks regardless of the tax. As a result, more is being paid for the product. While this will have little impact on some consumers, this will be greatly influential to low income consumers (Gelski; Fleischer). This same scenario occurred with the introduction of the tobacco tax, where the product is still used, yet increasingly expensive in an effort to both curb consumption and meet increasing demands for health care relating to negative side effects.
Although there are many beneficial reasons for implementing the sugar tax, especially in consideration of obesity and diabetes reduction/prevention, there are harmful effects as well, such as increased costs, which is especially noted by those that have little disposable income (Tavernise). It is recognized that the sugar tax would most likely be opposed by many Swiss consumers because many people have no intention of changing their nutrition habits solely because of a tax. Therefore, as many will oppose the tax, it will be harder to pass it. On the other hand, it is recognized that the sugar tax would offset some negative costs, such as certain health care. Yet, there may be increased animosity by those consumers that do not require these types of services, arguing that they should not be required to pay the tax because they do not use the services for which the tax pays.
The sugar tax offers benefits and consequences to Swiss taxpayers. On the one hand, more funds will be available for government-provided care related to obesity and diabetes, funneled to the receptive facilities as a result of the tax. On the other hand, low income consumers will be left with even less disposable income. Although it may be argued that these consumers should not be purchasing sugary drinks, this decision should be up to the consumer, not based on the increased costs caused by a sugar tax. At the same time, there is mixed evidence as to the effectiveness of the sugar tax. In some locations, no sugar consumption reduction was having been seen, while other locations have seen significant sugar consumption reduction. As a result, prior to passing the sugar tax, it would be beneficial for the government to conduct studies to see how the population would react to such a tax.
