Business Debate: Should NZ introduce a sugar tax?

20 Feb, 2018 12:18pm

In this edition ad man Paul Catmur squares off against water man Tony Falkenstein on whether the nation needs a sugar tax.

New Zealand has the third highest obesity rate in the OECD, with over 30 percent of New Zealanders falling into this category.

The Ministry of Health predicts that these trends will continue and the figures are only set to get worse over time.

As New Zealanders look for answers, sugar has become villainised as the main offender and there's a growing call for the introduction of a tax on food products with a high sugar content. 

So, in the second edition of our business debate series, we ask: Does New Zealand need a sugar tax?

NAY: Paul Catmur, chief executive at Barnes Catmur & Friends Dentsu

A sugar tax is a strong, simple, common-sense solution to the chronic problem of obesity. Unfortunately, it's also the wrong one.

This is not because it goes against freedom of choice, not because it would be a tax on the poor, and certainly not because it would involve hardship in the soda industry. The issue is that it just doesn't work. Sorry about that.

In 2017 the NZ Institute of Economic Research looked at 47 peer-reviewed reports from around the world where a sugar tax has been introduced and found that the evidence for overall health benefits was 'weak' and that the resulting quality of diet and health-risk factors were 'unchanged.' It concluded: 'No study based in actual experience with sugar taxes has identified an impact on health outcomes'*.

These are pretty clear-cut conclusions and perhaps unsurprising when you consider that although sugary drinks are already infinitely more expensive than the healthy, freely available substitute of water, sales are highest amongst the poor. Sometimes people can be annoyingly irrational.

Furthermore, if we were to decide that New Zealand was different from everywhere else in the world (a popular view with some) and introduce a sugar tax anyway, we run the risk of the Government claiming this as definitive action and absolving itself from taking any measures that might actually solve the problem.

So, if the sugar tax, won't work, what will? There's the rub. I suggest that to solve it, we need to go wider than the medical profession alone. They are experts on saving lives, not changing behaviour, so consultation needs to include economists, both traditional and behavioural, and perhaps even poachers turned gamekeepers. Yes, the marketers and advertisers who have proved so effective at encouraging consumption of cheap carbohydrates in the first place may well have some good ideas about how to reverse the flow

So, as much as a sugar tax might appeal to the talk-back listener it is nothing more than a distraction. It will take imagination to solve this problem, not a knee-jerk response which has already been proved to fail.

YEA: Tony Falkenstein, chief executive of Just Water International

The role of government is to protect its citizens, and therefore we have a multitude of laws from compulsory seat belts to fences around pools to do so.

We already know that New Zealanders are eating too much sugar, and often the body cannot handle turning that into fat. Type 2 diabetes and heart problems is a recurring consequence, making New Zealand the third most obese nation in the world. This is putting an increasing financial burden on our health system.

The advertising industry promotes sugar-laden products as the key to healthy living. This is no different from legalised drug pushing to the vulnerable.

If we can reduce sugar consumption, the taxpayer will not be forced to pay increased taxes to those who have been legally allowed to take this addictive drug to excess.

It would be great if we all had the intelligence and the will to say "no" to harmful drugs entering our system, but that is not reality.

For this reason, I am advocating a "Sugar tax incentive" to give manufacturers time to reduce the sugar in their products and New Zealanders the time to wean off this addictive drug.

The incentive would be for manufacturers to reduce the sugar in their products over 6 years, or pay a penalty tax on the excess sugar.

Thus, there would be an immediate 25 per cent tax on any products with over 10 per cent added processed sugar content. The same rate of tax would apply on a sliding scale until the acceptable sugar content was 6 per cent, as below:

Let's help our citizens reduce their reliance on this addictive drug and increase their well-being.

This tax is the first step.