Sugar taxation: revenue or health?

We have a heavy problem with obesity and taxation isn’t the answer. Obesity is one of the major risk factors for a number of chronic, non-communicable diseases including the top leading causes or morbidity and mortality in the Philippines (i.e. diabetes, cancer, and cardiovascular diseases)1,2. In 2016, 22.3% of Filipino adults above the age of 18 were overweight and 4.7% were obese3. These numbers translate to about 18 million overweight and obese Filipinos. The cost of treating obesity and obesity-linked diseases has a sizeable impact to the public health system. The cost of obesity in the Philippines was estimated between US$500 million and US$1 billion, or between 3.5% to almost 8% of total healthcare spending in 2016. Obesity also reduces life span by an average of four to nine years across ASEAN member states. Among Filipino males, obesity-linked diseases reduce productive years by between eight to twelve years4.

The over-consumption of sugar is associated with weight gain. As such, the consumption of sugar-sweetened beverages (SSBs) has been linked to obesity, as they are unnecessary sources of empty calories (little to no nutritional value). Hence, the recent introduction of SSB excise tax as a health measure, sits on the premise that such tax will curb consumption of SSBs by encouraging individuals to make healthier choices.

Policy Analysis

Given the economic and social costs of obesity, the case for responding quickly is undisputable. Taxation is an undeniably efficient source of public funding. In the Philippines, it has been introduced to address the obesity epidemic and chronic non-communicable diseases associated with it. In October 2018, the government reported that is has collected P30 billion in excise taxes from SSBs. However, this is short from the projected or target revenue of P40 billion5.

  • Sugar taxation adds weight to the heavy problem of obesity. The SSB excise tax does not live up to its promise of curbing sugar consumption. Studies have shown that the evidence that sugar taxes improve health is weak6.
  • The SSB excise tax is not encompassing; rather it is a ‘discriminatory’ tax. Research does not prove that purchasing fewer SSBs leads to significant weight loss6. Weight loss requires reducing total caloric intake. Therefore, measures to reduce the risks of diet-related, non-communicable diseases should not only focus on altering the consumption of individual food items (i.e. SSBs) but should encompass overall diet.
  • Taxation is neither necessary nor sufficient approach to the complex issues of obesity. Evidence shows that such taxes aimed at reducing purchases of SSBs may actually have a short-term impact on sales. In Mexico, it was found that the purchasing behavior of consumers returned to almost pre-tax levels just two years after it imposed tax on sugary drinks7,8.

Combating obesity and the obesity-associated NCDs requires a holistic, multi-sectoral approach. Challenges related to limited knowledge and understanding of nutrition, unbalanced and unhealthy diet, and lack of physical activity should be addressed. Below are more cost-effective strategies on how we can meaningfully and significantly shape a healthier environment to reduce calories and sugar in the diet.

 

Recommendations

  • Reformulate sugar-rich drinks and food, and control portion size

These measures are more cost-effective than taxation in reducing calories and sugar intake9,10. However, government policy is required to set appropriate food and drink standards allowing companies to operate on the same footing. The policy should be developed on the basis of a national quantitative study on major sources of sugar in a typical Filipino diet. The initiation of this process will require considerable time and effort as it warrants a comprehensive analysis of sugar sources and involving various stakeholders in the policy process. Moreover, the government can control portion size by restricting the ability of food establishments to offer large single serving beverages.

  • Behavioral: Enforce restrictions on marketing, advertising, and sponsorship of sugar-rich food and drinks; and accelerate health information drive

Increased consumption of SSBs and sugar-rich food is often attributed to successful marketing, low cost, and high availability11. As promotion and marketing of these products remain unregulated, policy on responsible marketing and packaging of products can be legislated. The government can restrict marketing of sugar-rich food and drinks especially targeted to the youth at point-of-sale and by using mass media. Warning labels on food and drinks with high sugar content similar to tobacco products can also be considered. The DOH and DepEd can complement responsible marketing with a more intensive health information campaign against obesity in public institutions, schools, and through the use of public information systems. This approach is a necessary background measure to inducing behavioral change; but health education alone is insufficient to achieve the desired outcome.

  • Structural: Improve people’s access to and availability of healthier food options, and alter unfavorable retail environment

The government can institute a ban on the sale of SSBs, sugar-rich food and/or products not meeting the desired nutritional requirement on school grounds and inside government facilities. Zoning requirements can be enforced to prevent fast food restaurants from sprouting near schools. Another feasible measure would be requiring vendors (in schools, malls, parks, etc) to place healthier food options in special displays and along check-out aisles while placing SSBs and sugar-rich food in the back of the store. These policies may be initiated by local government units. However, a national policy on the establishment and/or improvement of food environments can better support local change.

 

Implementation

The recommended measures can be implemented in three phases:

Phase 1: Comprehensive assessment and health education

  1. Establish a national committee on sugar reduction involving key stakeholders.
  2. Conduct a national study on Filipino sugar intake and sources of sugar in the Filipino diet.
  3. Initiate an education caravan at the grassroots level.

Phase 2: Reduction of sugar content and restrictions on marketing

  1. Enact policy to reduce the content of sugar in SSBs and sugar-rich food.
  2. Legislate policy to reduce opportunities to market SSBs and sugar-rich food across all media.
  3. Revisit and revise food labeling criteria and standards.

Phase 3: Establishment/improvement of healthy food environment

  1. Coordinate with LGUs in the formulation of policies on creating healthier food environments.

 

Conclusion

What is the real motivation of sugar taxation? Is it about revenue, not health? If we are truly determined to reduce sugar consumption and improve the health of the people, then, we shouldn’t end the campaign against obesity by simply taxing sugar. In fact, there are more cost-effective ways of battling obesity and its associated diseases. Time is up. The longer we wait, the heavier the problem becomes.

 

End note: This was taken from an academic exercise where we were required to write a policy memo against sugar taxation.

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