Category Archives: Sugar Tax

Philadelphia Raising Money For Education Through a Sugar Tax

sugar tax

Despite the failure of similar laws in more than 30 U.S. cities and states in recent years, and in the face of massive opposition from the beverage industry, Philadelphia (PA) has instituted a 1.5 cent-per-ounce tax on sugary drinks and diet beverages. While other U.S. municipalities are considering similar levies – aimed, they say at reducing sugar consumption and obesity – only one locality, Berkeley CA, has such a law on the books. It was instituted in 2014.

Critics contend that such taxes disproportionately affect the poor, who  tend to more prone that other segments of the population to consume sugary drinks.

The same argument is put forth in the U.K., where what amounts to double taxation is about to be applied to sugary drink sales. Double taxation because such beverages already are subject to a sales (VAT) tax, and the new levy will add a levy of as much as twelve pence (eight cents) to the cost of a can of Coke.

The British scheme is intended to force companies who produce drinks like Coca-Cola, Gatorade and tonic water to reduce the amount of sugar in their recipes. Critics of the Conservative government say it has, in reality, just introduced another punitive tax on the poor.

The lowest-earning British citizens, who smoke moderately, already lose 37 percent of their disposal income to “sin taxes,” according to the Institute for Economic Affairs. “Sin taxes are a pious, regressive absurdity,” says the Spectator, riding the wave of incredulity racing across Britain.

Of course, no one is forced to glug their way through super-sized family bottles of Coca-Cola, but studies suggest people on lower incomes are the most regular consumers. By targeting cigarettes—and now sodas—the government is doubling down on disproportionately taxing the poor.

“It is astonishing that the Chancellor has announced a tax on sugary drinks when there is no evidence from anywhere in the world that such taxes have the slightest effect on obesity,” said Mark Littlewood, director general of the Institute of Economic Affairs. “Whether dressed up as a direct tax or a levy on industry, the effect will be that the government will be picking the pockets of the poor for no benefit.”

It’s also something Prime Minister David Cameron promised he would not do—just five months ago. At the time, he did not cite regressive taxation as his primary fear, nor concerns about the nanny state gone wild. He just said it wouldn’t work: “The Prime Minister thinks there are more effective ways of tackling this issue than putting a tax on sugar,” a spokesman said in October.

Well, he’s changed his mind.

His finance minister—Chancellor of the Exchequer George Osborne—announced that drinks companies would be taxed according to how much sugar is in each drink. One rate for drinks with more than 17.7g per 12-oz can, and a higher rate for those with at least 28g. Coke falls into the top bracket, and would cost around 8 pence (12 cents) more. High-end smoothies and energy drinks will also be subject to the tax, although there are exceptions for milk-based drinks and pure juices.

“I am not prepared to look back at my time here in this Parliament . . . and say to my children’s generation, ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing,’” he said.

Soda companies have two years to change their drinks before the levy comes in. A sales tax (VAT) is already charged when customers buy soda, unlike most other food and drink in Britain.

Osborne says he hopes the new tax will force the companies to adapt, but analysts say the charge is likely to be passed straight on to consumers.

Health campaigners, and some former New York mayors, hope that will encourage people to shop differently.

Meanwhile, Philadelphia’s Democratic Mayor Jim Kenney does not contend his sweet-drinks tax is health oriented: He sold the City Council on the idea by putting forth a plan that would see most of the raised revenue – an estimate $365 million over five years – into schools, preschools and similar education-oriented projects.

After the Council’s vote, Mayor Kenney said, “Thanks to the tireless advocacy of educators, parents, rec[reation] center volunteers and so many others, Philadelphia made a historic investment in our educational system today.”

Not to mention what parents will save by not having to pay to repair sugar-damaged teeth, or for the care of diabetes contributed to by kids’ excess sugar consumption.

 

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Did It AGAIN: Jumped On A Story BEFORE The NY Times!

 

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Each of the ‘cubes’ represents a teaspoon of sugar!

The story, in this instance, has to do with taxing the sugar in soft drinks. We reported, on March 22, that the U.K. intends to do that effective in 2018.

A week later. (on April 4) The New York Times mentioned the U.K. proposal in an article about Philadelphia’s plan to introduce a similar tax — and the fact that several other countries are leaning the same way, toward a new source of revenue that, by the way, would have serious, positive health benefits.

But still, this blog reported the sugar tax concept — a nearly a done deal in the U.K., from more recent reports — before New York’s ‘paper of record’ made mention of it in a report on Philadelphia’s  idea.

With extremely limited resources, FoodTrandTrends.com has twice in one week been ‘in front of’ one of the world’s most prestigious newspapers on an issue of enormous significance — health- and cost-wise — to a sizable sector of the public.

The Times said the proposed soft drink tax in Philadelphia could far surpass Britain’s in its reach:

Instead of the usual eat-your-vegetables pitch of public health reformers, [Mayor Jim Kenney is offering Philadelphians something delicious: a giant pot of money to fund popular city projects. He says his soda tax could raise more than $400 million over five years, enough to fund not just universal preschool, but also renovations to local libraries, parks and recreation centers; “community schools” that wrap social services with education; and cash for the troubled municipal pension program. He is not using the word obesity, or suggesting that people should drink less soda.

His tax could raise the price of a 20-ounce bottle of soda by 60 cents, an increase likely to make some shoppers think twice. But when asked about the health benefits of the tax, he says, “There’s really serious health benefits in pre-K.”

In other words, this soda tax isn’t for the nanny state; it’s for the needy state. Governments are starting to think of soda taxes as the next sin tax — an untapped source of revenue that could help with other things.

The Times, in short, used its vast resources — including time, tons of reporters and researchers — to take the story further than FoodTradeTrends.com did, and that’s as it should be.

Our purpose, as a blog on ‘trending’ issues, is to draw attention to issues, not necessarily to explore them in depth.

I personally develop FTT’s stories through my own research across a broad spectrum of consumer, trade and government resources, including many from somewhat obscure sources in the far corners of the world.

FTT must be doing something right: In the several months since it was launched, this blog has been seen in more than two dozen countries!

 

Levy on Sugary Soft Drinks Coming to Britain in 2018

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Photo: New Food Magazine

In Great Britain, where childhood obesity has reached crisis proportions, the government has just put forth a plan to tax sugar in both domestically-made and imported soft drinks starting in 2018. The plan was presented to Parliament as part of his annual budget proposal by Chancellor of the Exchequer George Osborne, who anticipates the levy will raise as much as £520 million ($740 million) annually. Much of that sum will be dedicated to school sports, he said.

A report on the plan by New Food magazine said this morning (March 22) that those who have been advocating for such a levy are overjoyed, but – as you’d expect – the soft drinks industry considers it “simply absurd” to target “the only category in the food and drink sector which has consistently reduced sugar intake in recent years – down 13.6% since 2012.”

Gavin Partington, Director General of the British Soft Drink said his is “the only category with an ambitious plan for the years ahead – in 2015 we agreed a calorie reduction goal of 20% by 2020.

“By contrast,” he went on, “sugar and calorie intake from all other major take home food categories is increasing – which makes the targeting of soft drinks simply absurd.”

Those on the other side of the issue no doubt think it is equally absurd that, as Mr. Osborne put it, “Five year old children [today] are consuming their body weight in sugar every year, [and] experts predict that within a generation over half of all boys, and 70% of girls could be overweight or obese.”

Indeed, New Food reported, “Public Health England recently revealed that four to 10 year old children consume around 22kg (49 lbs) of sugar a year,” and the Chancellor called that a significant contributor to the childhood obesity crisis.

He said: “One of the biggest contributors to childhood obesity is sugary drinks.

“A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13.

“That can be more than double a child’s recommended added sugar intake.”

The plan is to not implement the levy until 2018 to give the industry time to prepare, he noted.

His plan calls for two levy levels –one for total sugar content above 5 grams per 100 ml and a higher band for drinks containing more than 8 grams of sugar per 100 ml.