An Australian soda tax: A sweet plan to reduce diabetes, stroke and heart disease.

Suzy Honisett

Recent research from the University of Queensland, Deakin University, and the Obesity Policy Coalition provides a case for implementing a sugar-sweetened beverage or a soda tax in Australia. Research from these organizations highlights how a soda tax may reduce the number of new cases of type 2 diabetes by approximately 800 per year.

If a soda tax were implemented, the researchers found there would be a resultant 4,400 fewer cases of heart disease and 1,100 fewer people living with the consequences of stroke by 2041. In addition to these health outcomes, the researchers estimate that the soda tax would generate AUD$400 million (approximately US$299 million) in revenue each year.

Jane Martin, Executive Manager of Obesity Policy Coalition and co-author of the Australian soda tax research, says: "sugary drinks are the largest contributor of added sugar in Australians' diets and a major contributor to high rates of overweight and obesity in adults and children.”

Although there is a range of lifestyle factors and food choices that influence rates of overweight and obesity, the evidence provides a link between higher sugar-sweetened beverage consumption and increased body mass index, with this association apparent in adults and children.

According to current statistics, 63 percent of adults and 27 percent of children in Australian are overweight or obese, with unhealthy diets and high body mass index being the leading risk factors contributing to the burden of disease.

The financial implications of national overweight and obesity rates are significant. Data from Australia’s largest longitudinal study showing that the direct cost of overweight and obesity was AUD$21 billion (approximately US$15.8 billion) annually. “Yet we still don't have a national obesity strategy with the measures necessary to help address this very serious health problem," says Martin.

To achieve international goals for improved health and contained obesity rates by 2020 the World Health Organization has urged governments to consider economic tools, including taxes and subsidies, to improve the affordability and consumption of healthier food products and discourage the consumption of less healthy options.

There are an increasing number of countries implementing a tax on sugar-sweetened beverages, including Finland, France, Hungary, Mexico and recently the United Kingdom. Evidence for a tax on reducing consumption of sugar-sweetened beverages has been shown in Mexico, whereby, a 10 percent tax, generally passed on through increased product prices, showed a reduction in purchases of sugar-sweetened beverages by up to 12 percent. The impact of this tax on low-income households was even greater where there was a reduction in sales of up to 17 percent.

Australian soda tax research is based on a 20 percent valoric tax — the price of soda would increase by 20 percent and would be fully passed onto the consumer. Revenue generated from a soda tax in Australia could be set aside for health promotion campaigns or to subsidize the cost of healthy foods for low-income earners, similar to what was seen when the UK soda levy and the Mexican soda tax were introduced. The cost of implementing and monitoring the tax in Australia would be paid back approximately 14 times over in the form of less money spent on health care expenditure.

So far, the Australian government has made no moves to implement a soda tax. “The idea of a tax is faced with opposition from the beverage industry, with assertions that it would harm business and cost jobs. The current coalition government has unfortunately ruled out taxing sugary drinks, and the Labor government has also said they have no plans to introduce such a tax.  It was, however, encouraging to see The Greens party announce a policy to tax sugary drinks when campaigning before the recent federal election,” says Martin.