TAXES ON UNHEALTHY goods can reduce the level of consumption for people in lower socio-economic groups, a new report has found.
The study by the Lancet found that low-income households tend to be more greatly affected by price changes compared to high income homes. However, a FactCheck conducted by TheJournal.ie found that, while consumption might be reduced, the net effect on obesity rates was negligible.
In October last year, the Government announced levy on drinks which contain a significant amount of sugar.
The so-called “sugar tax”, which had been well-flagged in advance, means consumers will pay 30 cent per litre on drinks which have more than 8 grams of sugar per 100 millilitres. The charge will kick in this year.
Debate has raged about how effective the levy will be, especially in relation to obesity rates – something which the Government has consistently cited as the main reason for the tax.
According to the Lancet study, evidence shows that high-income families generally consume more, and spend more, on alcohol, soft drinks and snacks, compared to those on less money.
It said: “Increased taxes on unhealthy products will therefore affect a larger number of high-income households than low-income households, meaning that the revenues generated by taxes will come disproportionately from high income households.
Tax policies can also be designed to influence this effect. Since high income consumers are more likely to buy more expensive beverages, especially alcohol, an alcohol policy based on unit price may be less of a burden on low income household, compared to a policy based on volume.
Health levies also include minimum alcohol pricing. New laws were supposed to take effect early this year but the dissolution of the devolved government in Stormont stalled that process. It was hoped that both north and south would bring in minimum pricing at the same time to stop people heading across the border for cheaper alcohol.
The introduction of labelling on alcohol products is also included in the law, which will result in clear warnings about the danger alcohol poses to our health.
The Lancet study found that, as a proportion of total household expenditure, low income households tend to be more greatly affected by price changes compared to wealthier families.
“In the UK, the response to the possible introduction of a minimum price for alcohol was estimated to be 7.6 times larger in the poorest households, compared to the wealthiest. In Mexico, the introduction of a soft drinks tax resulted in an average of 4.2 litres less of soft drinks purchased per person, with a 17% decrease in purchases among lower income groups, and almost no change in higher income groups.”
FactCheck’s analysis of data from the NCDRisC project shows that in four countries which have had a sugary drinks tax in recent years (Mexico, France, Denmark and Hungary), average BMI (body mass index) and obesity prevalence increased or remained static, year-on-year, from 2008 to 2014.
Dr Rachel Nugent, Chair of The Lancet Taskforce said: “The evidence suggests that concerns about higher taxes on tobacco, alcohol, and soft drinks harming the poor are overstated.
“Some degree of taxation on tobacco is common in many countries, and while we are starting to see progress on alcohol taxes, there is much more governments should be doing – in both high and low income countries – to consider the careful introduction of taxes on other unhealthy products like soft drinks and snacks. Price policies such as taxes will be a key part of the response to rising rates of non-communicable diseases.”
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