[Updated] To tax or not to tax sugary drinks – the Beverage Association responds

[Updated with response from the Canadian Beverage Association]

Toronto – To tax or not to tax sugary drinks? That is a big question.

New research by the University of Waterloo, which was commissioned by several health organizations, has found that an excise levy on companies that produce sugary drinks would go far in reducing death, disability, and health care costs, says Diabetes Canada in a news release.

The health organizations include the Canadian Cancer Society, Childhood Obesity Foundation, Chronic Disease Prevention Alliance of Canada, Diabetes Canada and Heart & Stroke. The research was carried out at the university by Amanda C. Jones, Dr. J. Lennert Veerman and Dr. David Hammond.

The new research expands on a recent analysis that projected sugary drink consumption among Canadians and the resulting health and economic impacts, by estimating the benefit of a levy on sugary drinks.

According to the study, over the next 25 years, a 20 per cent excise levy on the manufacturers of sugary drinks will result in more than 13,000 lives saved.

It will also prevent:

• More than 600,000 cases of obesity and almost 100,000 cases of overweight among Canadian adults;
• Up to 200,000 cases of type 2 diabetes;
• More than 60,000 cases of ischemic heart disease;
• More than 20,000 cases of cancer; and
• More than 8,000 strokes.

In addition to reducing adverse health impacts, a 20 per cent levy over the next 25 years will account for $11.5 billion in health-care savings and government revenue of $43.6 billion ($1.7 billion per year).

A direct benefit to Canadians’ health is also projected —with almost 500,000 disability-adjusted life years (number of healthy life years lost due to ill health, disability or early death) being prevented if a 20 per cent sugary drink levy was implemented by the federal government.

Diabetes Canada adds that recent experience form different countries shows that supporting healthy choices through directed taxes can help decrease consumption of unhealthy products and improve overall health.

Canadian Beverage Association responds

The Canadian Beverage Association says the industry does have a role to play in the health of Canadians, and encourages continued dialogue between industry, health organizations and public officials.

But it doesn’t agree that interventions such as a consumption tax will be successful in terms of obesity reduction.

In a statement, the association says the report’s findings do not reflect the Canadian beverage marketplace.

“The data set from Euromonitor used in the analysis for this report included non-diet carbonated beverages,” says the association, “along with whole-category volumes (both low calorie and full calorie) for other beverage categories. All of these beverage categories would include some percentage of reduced-calorie varieties, and therefore the reported findings do not reflect the Canadian beverage marketplace, where more than 45% of beverages purchased are no- or low-calorie.”

The association also points to a report from the Conference Board of Canada, which found that daily per capita calories consumed through liquid refreshment beverages (including all non-dairy, non-alcoholic beverage categories such as 100% juices, energy drinks, ice tteas, etc.) have declined by 20 per cent per capita between 2004 and 2014.

The association goes onto say that Canadians consume 141 calories from these beverages, which is well under 10 per cent of daily calorie recommendations.

In the University of Waterloo report, says the association, if calorie-reduced varieties are excluded, per capita net volume of all non-diet beverages is 350 mL per day or about 150 calories per day.

Through its industry-led Balance Calories initiative, Canada’s beverage companies have set a goal to reduce beverage calories further by 20 per cent by 2025.

Successful implementation of a tax

A growing collection of studies also shows that a levy on sugary beverages decreases consumption.

Examples of successful implementation of sugary drink levies are found in Mexico, France, Hungary, Finland, Norway, Belgium, Chile, Barbados, and an expanding list of jurisdictions in the U.S. (i.e. Berkeley and Philadelphia) among others.

In Mexico, purchases of taxed beverages have decreased over two consecutive years and purchases of healthy beverages are up.

A number of health organizations have proposed an excise levy on sugary drinks to the federal government for consideration in the upcoming federal budget. This approach would raise revenue for much needed healthy living initiatives that will benefit the health of Canadians. These include:

• subsidizing vegetables and fruit to make them more affordable for Canadian families;
• ensuring access to safe drinking water and plain low-fat milk in Indigenous communities;
• providing healthy school lunch programs for Canadian students;
• introducing public education and awareness including food literacy and skills; and
• implementing physical activity programs.

This call-to-action to introduce a manufacturer’s levy on sugary drinks is endorsed by 24 organizations nationwide.

The health groups emphasize that a levy is not the only solution to the issue of excess weight and the overall health of Canadians.

However, says Diabetes Canada, given Canadians are drinking an unhealthy amount of sugary drinks, which are the single greatest contributor of sugar in our diets — and a significant driver of chronic disease and obesity, a levy is a critical component of a broader strategy to promote healthy eating and drinking.

This includes restricting marketing to kids, improving food and menu labeling, providing better access to affordable healthy foods and water, increasing food literacy and preparation skills, as well as public education.

Image: ThinkStock