Should the state tax what we eat?

Sugar has become a political matter. Mexico imposed a tax of one peso per litre on sugary drinks in 2014. France introduced its so-called soda tax in 2012 and, in 2018, made it rise with the sugar content of the drink. Britain's soft drinks levy (1) took effect in April 2018, with a higher rate for drinks that contain more sugar. A study of household purchases in Mexico found that purchases of taxed drinks fell in the first year. For supporters, the lesson is simple: prices change behaviour.

Their argument is also one of public health. Too much sugar is linked to obesity, diabetes and tooth decay, and it is the health system, funded by all taxpayers, that pays for the consequences. A tax asks those who profit from the product, and those who consume it, to bear (2) part of that cost. The British version is interesting because it falls on producers and importers rather than on shoppers. With a lower and a higher rate, it was designed to give companies a reason to cut the sugar in their recipes rather than to raise their prices.

Critics reply that a tax on food is a tax on the poor. Poorer households spend a larger share of their income on food, so the same extra cost weighs more heavily on them. Defenders answer that low-income families also suffer most from the illnesses linked to a poor diet, and that the revenue can be spent on them, for instance on school meals. A second objection is about freedom: is it the state's business to decide how many sweet drinks an adult may enjoy? Defenders point out that a tax forbids nothing. It adds a price signal to a market in which choices are already shaped by advertising and by the layout of supermarkets.

A third objection concerns effectiveness. Soft drinks are only one source of sugar, and shoppers can switch to other products that escape the tax: in a shop, a cake, a sweetened yoghurt and a fruit drink often sit on the same shelf. Mexico's tax, for example, left out pure fruit juices. A levy that is too narrow may change the label on the shelf without changing what ends up on the plate (3).

The sensible conclusion is that a tax cannot do the work of a whole policy. Public acceptance matters too: a measure explained as a health policy is accepted more readily than one that looks like a way of raising money. It works best when it sits alongside clear labelling, limits on advertising aimed at children and food education at school. Taken alone, it is a blunt instrument; combined with those measures, it can encourage industry to change and families to think before they choose.