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Is a sugar tax good for health or rather good for the treasury? | NOW

A sugar tax can be efficient, but it must be properly designed and combined with other health measures. When asked, the RIVM and health economists say this to NU.nl.

The experts are thus responding to the advice of the Council for Public Health and Society (RVS) published Wednesday morning for a healthier organization of Dutch society. One of the recommendations is a tax on sugared products, such as sweets and soft drinks.

Such a sugar tax has already proved its worth abroad, but the tax is not equally effective in every country. Last year, RIVM compared the impact of a sugar tax on sugared drinks in the United Kingdom, France and Norway.

The UK works with several steps: the more sugar there is in a product, the higher the tax. Of the three countries in the study, the UK tax appears to have the most effect. As much soft drinks are still sold, but since 2017 – just before the introduction – producers have drastically reduced the sugar content in their taxed drinks.

The share of drinks with more than 8 grams of sugar per 100 grams decreased between 2015 and 2018. The number of drinks with less than 5 grams of sugar per 100 grams increased by 40 percent. In 2018, the latter category accounted for 67 percent of the British soft drink market, while the share was 48 percent in 2015.

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In France, soft drink sales fell slightly. The same trend was observed by RIVM in Norway.

‘It should not become a tax measure’

And so the Netherlands must learn lessons from abroad in order for such a measure to be successful, according to RIVM. “By introducing such tiered criteria, producers have an incentive to lower their sugar levels and consumers do not have to change their behavior. But it is also important that a healthy, cheaper alternative, such as water, is available,” said the institute.

Economists emphasize that the sugar tax should not become a tax measure that is only good for the treasury, but does nothing for public health. “If it mainly generates tax revenue, it is a very bad idea,” says health economist Marc Pomp. “Because then you mainly place an extra tax on people with a low income, who, in percentage terms, spend more on groceries than people with a higher income.”

Pomp says the measure’s success or failure depends on how much prices rise. “If the price of a bottle of soft drink or a bag of candy goes up by 1 cent, the consumer will not notice that much and therefore will not change their behavior. If 20 or 30 cents are added, it is already a completely different story.”

Sugar tax can significantly reduce the number of sick days

Last year, economists, mainly from RIVM, published a report in which they rank a number of health measures according to their usefulness. Raising the prices of sugared products by 10 percent scored very high on that list. The measure would reduce the number of sick days by 202,809, which also means lower healthcare costs. In addition, a tax on fatty foods and a ban on advertising unhealthy products are also very effective measures, according to the report.

The WHO health organization already stood up for a sugar tax in 2017. She refers to studies showing that a 20 percent price increase will reduce the consumption of sugary drinks by 20 percent.

The WHO cites Mexico as an example. The country introduced a sugar tax in 2014, which reduced sales of sugary drinks by 7.6 percent within a year. The lowest-income families even bought 11.7 percent less soft drinks. Water sales increased by 2.1 percent. In two years time, the measure saved 2.6 billion dollars (2.2 billion euros) in healthcare costs.

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