Should a Sugar Tax Be Levied?

Topic: Should a sugar tax be levied?

Worldwide obesity has become more serious in the recent years. World Health Organization (WHO) (http://www.who.int/mediacentre/factsheets/fs311/en/) indicated that in 2014, more than 1.9 billion adults were overweight. In Hong Kong, the situation is also far from optimistic. Tsang (2016) points out that one in five Hong Kong people is overweight. Additionally, some studies have appeared to verify that sugar-sweetened beverages (SSBs) are closely related to the obesity problem. (Dubois et al., 2007) In the meantime, WHO for the Western Pacific hosted a workshop on taxing sugar-sweetened beverages on 21 and 22 September 2016 in Manila, which suggested that tax policies would be a comprehensive approach to urge healthier alternatives and prevent sugar consumption. (World Health Organization Regional Office for the Western Pacific, 2016) However, some claims that a sugar tax is ineffective. The potential problem of the tax policies has stirred up controversy. In this paper, the possible benefits of the policies will be illustrated in terms of public health and economy to argue that a sugar tax should be imposed.

First of all, implementing a sugar tax is likely to improve the public health. A sugar tax is an economic incentive to motivate people to decrease the SSB consumption. According to WHO’s meeting report of the technical workshop mentioned in paragraph one, it stated that “A meta-review commissioned by WHO showed that taxing SSBs had the strongest and most consistent effect on consumption if the price of the drink was raised by 20% or more. ” (World Health Organization Regional Office for the Western Pacific, 2016, p.2) Imposing sugar tax would seem to be an effective mean to reduce the SSB consumption. As SSB consumption is presumably to cause the health problem, such as obesity, heart disease or some cancers, a sugar tax should be implemented to solve the health problem in Hong Kong. In addition, sugar tax could be levied on producers and retailers, which would probably increase the production cost, and thus the soft drinks companies might increase the price of the sugary drinks. They would like to shift the tax burden to the consumers. Because of the increasing prices, people would possibly consume fewer SSBs, so the carbohydrate intake could be declined. The opportunity of suffering from the related health problems might also be decreased. Then the public health would be improved. In accordance with the American Journal of Public Health, after Berkeley’s sugar tax was implemented, SSB consumption was dropped by 21% and the consumption of water was increased by 63% in the city's grassroots. (Falbe et al., 2016) This result also appears to demonstrate that the sugar tax could effectively reduce the SSB consumption and thus the public health would be increased.

Secondly, imposing a sugar tax might benefit Hong Kong’s economy. Hong Kong’s business environment has been well known because of its simple and low tax regime. Besides, a problem behind this fiscal advantage is an extremely narrow tax base. A sugar tax is assumed to be revenue generating. It is likely to widen the tax base and increase the government revenue. Brownell noted that “Taxes at the state level, as examples, would generate $139 million in Arkansas, $173 million in Oregon, $221 million in Alabama, $928 million in Florida, $937 million in New York, $1.2 billion in Texas, and $1.8 billion in California.”(2009) In reference to those examples, although Hong Kong has not implemented the sugar tax, it could be foreseen to bring economic benefit to Hong Kong. Additionally, the value of taxing SSBs lies not only the health gain but also the excessive revenue-raising potential. (Shin, as cited in Tsang, 2016) In short, imposing the sugar tax in Hong Kong is beneficial in term of increasing revenue. Furthermore, if a sugar tax were levied, the health care expenditure would be decreased. As mentioned before, a sugar tax is presumably to raise the public health, and hence the people using medical service might be declined. Then the government expenditure in public medical expenses could be lowered. The increase in revenue and the decrease in expenditure are conceivable to advance the society in the long term. “… the shift from taxing unhealthy products to gain revenue to a focus on health promotion and disease prevention. Revenues from taxes can be earmarked for health promotion purposes or contribute more broadly to health or social security spending,” according to WHO’s meeting report of the technical workshop mentioned in paragraph one. (World Health Organization Regional Office for the Western Pacific, 2016, p.14) In a nutshell, taxing on SSBs could benefit Hong Kong’s economy; in the long term, it could finally improve the public health.

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