Ideology Behind the Case Against Sugar Taxes

Geoff SimmonsHealth

Last week a corporate funded think tank released a report opposing taxes on junk food, alcohol and cigarettes. No surprises there.

The only surprise is that the New Zealand Initiative, an organisation that purports to use economic evidence, argues that junk food taxes ‘don’t work’. They think the basic law of demand and supply doesn’t hold with junk food taxes – if the price goes up people won’t consume less. Despite this tactic having worked for cigarettes and alcohol it apparently won’t work on junk food.

It seems unbelievable, but let’s spend a moment understanding how their argument is constructed. They begin their ‘analysis’ outlining some standard libertarian views on how people are rational and know what they need best, better than any government. Eating donuts make us happier than eating salad, regardless of the health consequences, so you need a very good reason to make someone choose salad.

They don’t consider other perspectives, or look at the evidence on whether rational choice pans out in the real world. They don’t ask whether children can make informed choices that will influence their whole life. Nor do they explain why it is okay for corporates to influence us through advertising but when the government does the same our freedom is suddenly at risk.

Crucially they also overlook the fact that the government picks up the tab for poor health via the tax, welfare and health system. If you take into account this inconvenient piece of reality, taxing junk food actually looks like user pays – either people eat healthier and avoid the tax, or they contribute to the future burden they will have on the state.

With this freedom of choice ideology as their cornerstone, any potential sugar tax has to be proven without a reasonable doubt before it could proceed. Much like a murder trial, in the view of the New Zealand Initiative, our freedom of choice is sacrosanct until proven otherwise.

Against this benchmark it is easy to construct straw men and then knock them down with a swipe of their (invisible) hand. Sugar taxes have only been in place for a short period of time and it will take years to have absolute proof. So we have to wait.

Delay is exactly what they want. It is a tactic that worked well with tobacco taxation and until recently on climate change – let’s wait until we know for sure, ay? It is a conclusion that plays well with their funders.

Meanwhile, based on the same evidence, public health researchers and other economists have reached a totally different conclusion. How can this be? It is because they are asking a totally different question.

New Zealand faces a future where one in three people will have diabetes – a life threatening condition that could clog our hospitals with amputations, blindness and kidney disorders. Is this the future we want?

If so, then freedom of choice is a great idea – that is where it is taking us currently. The New Zealand Initiative presents no plan for turning that around.

If not, then on the balance of available evidence the best way forward is to treat junk food the same as we have done with smoking: taxation, regulation and education. Tax the bad stuff, regulate marketing to kids and labeling, and teach people what healthy eating means.

We can argue the detail of the points – and I’d be happy to debate them with the author of the New Zealand Initiative’s report. However this is the nub – they say that freedom of choice is innocent until proven guilty, while we ask on the balance of evidence what is the best way to avoid this looming crisis?

What you find depends on the questions you ask. Of course that reality is more nuanced than simply claiming sugar taxes ‘don’t work’ – that claim has sufficient truthiness to serve the needs of their corporate backers.

What doesn’t have any evidence is the Initiative’s claim that “education is better”. There is simply no evidence to back up this claim that would stand up to the Initiative’s self professed high standards.

Their report hasn’t even looked at the evidence on education, otherwise they would know that it only works for kids, and even then it needs to be done well so is expensive to deliver. They provide no plan for how to deliver quality nutrition education in schools, nor how to pay for it. That is why it isn’t even in their report.

Instead of a facile debate over whether a sugar tax would work or not, we should be discussing which we value more – living in a free society where you can eat what you like and burden the state, or whether we value having a healthy, productive society.


Ideology Behind the Case Against Sugar Taxes was last modified: April 29th, 2016 by Geoff Simmons
About the Author

Geoff Simmons

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Geoff Simmons is an economist working for the Morgan Foundation. Geoff has an Honours degree from Auckland University and over ten years experience working for NZ Treasury and as a manager in the UK civil service. Geoff has co-authored three books alongside Gareth.