Grattan Institute: why Australia should tax soft drink

A report by the Grattan Institute recommends the introduction of a tax on sugary drinks in Australia to help recoup some of the costs of obesity to the community.

Calling for a new excise tax of 40 cents per 100 g of sugar, on all non-alcoholic, water-based drinks that contain added sugar, the report estimates the tax would increase the price of a two-litre bottle of soft drink by about 80 cents, raise about $500 million a year, and generate a fall of about 15% in the consumption of sugar-sweetened beverages.

The report calculates that obesity costs Australian taxpayers more than $5.3 billion a year, as obese people require more medical treatment and hospital admissions, and are also more likely to be unemployed — and therefore paying less tax — compared to the rest of the population.

One in four Australian adults are now classified as obese, up from one in 10 in the early 1980s. Around 7% of Australian children are also obese.

The report stresses that a new tax is not a “silver bullet” solution to Australia’s obesity epidemic, but claims the proposed tax would encourage healthier lifestyles.

“Obesity is one of the great public health challenges of modern Australia, and so this is a reform whose time has come,” said Grattan Institute Health Program Director Stephen Duckett. “We target these drinks because most of them contain no nutritional benefit.”

Countries that already have or are planning to introduce a tax on soft drinks include France, Belgium, Hungary, Finland, Chile, the UK, Ireland, South Africa and parts of the United States.

The report says the Australian Government could use the $500 million a year raised by the new tax to reduce the budget deficit or boost healthcare funding, or the money could be spent on programs designed to treat obesity and promote healthy eating.

“How we use the money is a debate for later,” Dr Duckett said. “For now, Australia should introduce this tax because it offers twin benefits: it will reduce the number of people who become obese and it will ensure fewer taxpayer dollars have to be spent on the damage done by obesity.”