Austaxpolicy blog

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A sugar tax will benefit our most disadvantaged groups
9 October 2017 by Anita Lal

For a long time, a major concern of the public health lobby’s proposed sugar-sweetened beverage tax has been that it would unfairly punish disadvantaged groups. But research from the Global Obesity Centre and Deakin Health Economics, at Deakin University, debunks this theory. It shows that lower socioeconomic groups would in fact receive the biggest health benefits from a tax on sugary drinks, and would spend only a fraction more on these drinks per year than other groups under this system. Our study, published in PLOS Medicine, is the first of its kind to examine the equity of a 20 per cent tax on sales of sugar-sweetened beverages in Australia, by assessing potential cost-effectiveness, health gains and financial impacts, for different socioeconomic groups. The modelling predicts that those in Australia’s lowest socioeconomic groups would have the most health gains from the tax, and the extra cost to them due to the increased price of sugary drinks would be less than $5 more than the highest socioeconomic group per year. The study also showed a sugar-sweetened beverage tax could save $1.73 billion in health care costs over the lifetime of the population.

Health and financial benefits

We predict that health benefits are likely to be better felt by lower socioeconomic groups as they are typically more price sensitive – so more likely to stop buying sugary drinks when prices increase. They are also the highest consumers of sugary drinks, so there is a greater scope for reduction in their consumption. To calculate the benefits of a sugary drink tax, our research looked at predicted changes in consumption levels due to a change in price, then converted that to a change in population body mass index (BMI). This was then used to predict the reduction in the incidence of certain diseases related to obesity. These diseases include diabetes, ischemic heart disease, stroke, hypertensive heart disease, colorectal cancer, breast cancer, endometrial cancer, kidney cancer, and osteoarthritis of the knee and hip. By increasing the risk of all these diseases, high BMI has the second highest proportion of total burden of disease in Australia at 5.5 per cent. We found that a decrease in the purchase and consumption of sugary drinks would lead to significant health gains and a reduction in health care cost across all socioeconomic groups.

Read the full article at Austaxpolicy blog.

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