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The Sugary Drinks Tax - The Economic Case for Action

16/08/2016 17:45 | Updated 16 August 2016

In a final throw of the dice to try and prevent the Government from going ahead with its planned soft drinks industry levy, sugary drinks companies have released questionable claims of job losses and the economic impact of such a tax.

Unsurprisingly these warnings of doom and gloom are coming from those who, for decades, have benefited the most from selling these high calorie and nutritionally empty drinks that in some cases contain more sugar than a child's maximum daily limit in just one can.

The economic burden of obesity
When it comes to considering the economic impact of a levy on the soft drinks industry, there's a compelling economic reason for action - the vast costs of obesity. We know that being obese increases the risk of developing costly conditions such as Type 2 diabetes, cancer, liver and heart disease and associated mental health conditions.

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According to NHS England around £16 billion is spent on the direct medical costs of diabetes and conditions related to being overweight or obese each year. This figure is dwarfed by the indirect costs of obesity due to employers and to society due to unemployment, early retirement and associated welfare benefits.

The estimated cost to the UK economy from obesity amounts to a whopping £27 billion a year. But tackling our obesity epidemic is in all our economic interests and would benefit a huge number of industries and employers given that a healthy workforce is a more productive workforce.

The impact of a levy on industry
Furthermore there remains no scientific, peer reviewed evidence that a soft drinks industry levy would damage the economy. Emerging research from the USA suggests that claims of job losses due to sugary drinks taxes are over stated by the drinks industry. In fact, a modelling study from the UK found that a 20 percent tax on sugary drinks could prevent 3.7 million cases of obesity in just a decade. Research has also shown that it could bring savings to the NHS of almost £300million over twenty years.

Of course the causes of obesity are complex and it would be wrong to point the finger of blame at soft drinks alone. But it is clear that eating or drinking too much sugar is a key reason for consuming extra calories and therefore a cause of obesity.

Saving money tomorrow by tackling childhood obesity today
Children aged 11-18 years consume three times more sugar than is recommended by Government guidelines and sugary drinks are their biggest source of sugar, making up 30% of their total intake.

Some parts of the drinks industry are making efforts to reduce the sugar in their products. But a single 330ml can of cola drink can still contain nine teaspoons of sugar, which is more than a child's maximum daily limit of added sugar. These types of drinks do not provide any nutrients and don't fill you up - which is why we call them empty calories.

It's not just the cost of obesity that is spiralling. Figures from the Local Government Association show that the amount hospitals spent on multiple teeth extraction in children in England and Wales rose from £21million in 2010/11 to £35 million in 2014/15. Excessive consumption of fizzy drinks and foods high in added sugar are also a major reason behind the surge in cases of treatment - 40,970 procedures in 2014/15 compared with 32,457 in 2010/11 an increase of more than a quarter.

Our NHS simply cannot cope with the added strain. Simon Stevens, Chief Executive of NHS England has pointed out that the Government now spends more on obesity-related conditions than the police and fire services combined and tackling obesity would save the NHS billions every year.

Preventing overweight and obese children from growing into obese adults would also protect them from the range of physical and mental health complications linked to obesity, including Type 2 diabetes, cancer, liver and heart disease.

Support for a sugary drinks industry levy

Over 30 leading health organisations that make up the Obesity Health Alliance agree that a levy on manufacturers who produce the most sugary soft drinks is a vital measure to help tackle childhood obesity.

There is clear evidence from France, Denmark, Finland and Hungary, who have introduced similar levies, that it does reduce consumption of sugary soft drinks.

Any public health measure must always consider the financial impact of action. But it is simply misleading to talk about possible financial impact of a measure without also talking about the economic burden we are already facing. The economic argument for action is huge - £27billion a year. That's why we can't afford not to introduce the soft drinks industry levy.

Image from Wikimedia Commons

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