In the UK one of the major medical stories in 2015 was the proposed sugar tax. This is has been a very topical discussion topic in my Economics lessons and I do believe its an issue that needs to be addressed ASAP. I find this topic particularly interesting as I am able to combine my interest in economics as well as having a strong health aspect. In this post I will look at why the government ought to intervene and discuss the truth other whether a sugar tax would be effective.
I believe it is imperative that we take action to reduce sugar consumption with the main issue lying in sugary foods/drinks (such as confectionary and fizzy drinks). Currently these products are becoming increasingly over-consumed due to the actions of the market. The problem is that when left to the market, price is too low; thus only a small percentage of income is required to consume the product. Additionally, foods with high sugar content are too readily available in the modern world with advertising strategies, both nudging consumers towards sugar-rich products. Similarly, there is information failure in the market; although the nutritional values are, by law, situated on the packaging they are often overly complicated, leading to consumers not understanding the true contents of the good. The pricing strategy is the greatest issue as many consumers do understand the long term outcomes of a high sugar diet but remain myopic and focus on the short term benefit (as we would all admit they do taste delicious).
The overconsumption of sugar has a private cost to the consumer which does not only entail the financial cost but also the cost to ones health. Tooth decay is highly associated with the overconsumption of sugar whilst obesity is becoming an increasingly prevalent problem which stems from the overconsumption of sugar also, becoming more prominent in children. Obesity often leads to further health problems; increasing personal risks of strokes and diabetes. The number of obese people in the UK has more than trebled in the past 25 years it was found 1 in 5 primary school children are obese. It has been proven that childhood obesity often transpires through to adulthood which could consequently worsen existing health problems and lead to premature mortality. This highlights the need for intervention to minimise the long term consequences from escalating in the future.
An increase in health related problems linking to obesity, increases the strain on the NHS and will reduce its efficiency. Every year the burden on the NHS is £6 billion for the costs of treating obesity and if we fail to address the issue this figure will soon head towards £12 billion. As a higher proportion of the UK labour force encounter health issues, it is likely they will reduce their personal productivity by taking time off work. Not only is there a private cost in the form of lost income leading to a lower standard of living, there is a cost to the innocent third party as the burden on the taxpayer will increase (as demand for the welfare system furthers). As a result the production potential of the UK economy will fall and reducing economic growth rates – certainly not what we need in a time of recovery.
The proposed sugar tax would be a 10%-20% tax on all sugary products, including fizzy drinks and confectionary, where the revenue generated would be used to pay for subsidies on fruit and vegetables. This action is one of eight potential policies suggested by the department of health. This is highly backed by doctors in an effort to slow the obesity epidemic. This method has been proven to be effective in other countries such as Mexico where they saw a 12% reduction in the consumption of fizzy drinks after the tax was implemented. It is predicted that a mere 20% tax could reduce the prevalence of obesity in the UK by 180,000 people.However I believe that in order to significantly affect the obesity issue there must be a combination of policies to be effective (for instance a clampdown on the marketing of unhealthy food as well as bans on clusters of fast food restaurants). In order to be effective the government need to be ruthless to reel the UK population off the highly addictive product.
I guess we are left to wait and see whether David Cameron chooses to implement this sugar tax and if so how effective will it be…