COMMENTARY: Sugar tax is only the first step

Dr. Catherine Mah is Canada research chair in Promoting Healthy Populations, and associate professor in the School of Health Administration at Dalhousie University. She directs the Food Policy Lab, a multidisciplinary program of research on the environmental and policy determinants of diet and consumption. Mah is an expert appointee to Canada’s federal Nutrition Science Advisory Committee reporting to Health Canada, and member of the inaugural Canadian Food Policy Advisory Council reporting to the federal minister of Agriculture and Agri-food. She was a founding member of the St. John’s Food Policy Council and is a former co-chief pediatric resident at the Janeway Children’s Hospital.

By Dr. Catherine L. Mah

Newfoundland and Labrador has a revenue problem and a health-care problem.

The new soda tax is an attempt to strike against both.

Effective 12:01 am on Sep. 1, 2022, Newfoundland and Labrador consumers will pay a new tax of 20 cents per liter on sugar-sweetened beverages.

Which drinks will incur the tax? If sugar can be found in the beverage’s ingredient list — in any of its guises, from sugar to molasses, corn syrup, glucose-fructose — those drinks will count. Soft drinks, fountain drinks, sweetened teas, slushies, “energy” and “sports” drinks. There is a coffee shop exemption, where you may ask for sugar without paying extra, although perhaps there is the hope that you will not ask. There is no exemption for pineapple.

What will the tax do for Newfoundland and Labrador?

It will ask the businesses and residents of the province to look twice at the price of purchasing sugary beverages, at a time when food inflation is at nearly 10 per cent.

But there are other reasons to look twice as well.

The public health risk from sugary beverages is serious, and well studied. Excess added and free sugar intake is linked to many chronic conditions: tooth decay, obesity, diabetes, heart disease and stroke, and some cancers. Diets high in sugar-sweetened beverages were estimated in 2019 to be responsible for 242,000 deaths globally and 6.31 million years in healthy years of life lost.

What will the tax do for Newfoundland and Labrador?

Over 50 countries worldwide (and counting) have adopted a sugary drink tax. Some countries, such as Norway, have been taxing sugary items since the 1980s. Many of the adopters are smaller island nations.

The Newfoundland and Labrador Medical Association, Canadian Medical Association, Canadian Pediatric Society, Canadian Diabetes Association, Dietitians of Canada, Childhood Obesity Foundation, Heart & Stroke, and the Chronic Disease Prevention Alliance of Canada have all recommended a tax to reduce sugary drink consumption.

Study after study has shown the health and economic effects of soda taxes. The evidence is clear: soda taxes reduce demand for soda. Sugary beverages sell, and companies are making money from them. Taxes raise the prices for, and reduce sales of, targeted sugary drinks.

policy goals

So, will the tax accomplish its first policy goal for the province? Yes, the tax will work. Revenue will be raised. Revenue will be raised, as long as consumers continue to buy beverages. Nutrition surveillance in Canada shows Newfoundland and Labrador to be a leading consumer of sugary beverages, especially among children and youth. The province estimates that a little over $5 million will be generated from the tax this year. It has promised to spend the proceeds on health. The biggest soda tax promise in Budget 2022 was $7 million for a tax expenditure for physical activity.

Thus, the second policy goal: will the tax support health? This will depend on the next steps by the province, which must show that it is setting the tax up for success, and that it will not do health promotion by halves. What should the next steps look like?

First, the new tax shows that Premier Andrew Furey and his government understand that food affordability is an important factor in a healthy diet. This is excellent, because advocates in the province have suggested many additional options to make life more affordable, for more families in the province, and promote a just pandemic recovery.

Second, the Health Accord put social determinants of health first in “what really matters” to help people live healthy lives. The province has named social and economic well-being as an explicit focus of its policy plans. A sugary drink tax could help avoid direct health-care spending of over $50 billion in Canada over the next 25 years. A priority to redirect these savings would be effective multi-year investments to reduce poverty and food insecurity for which the province received national research attention before.

Third, health advocates have long called for versions of the tax that levy players higher up in the food supply. This type of implementation would have been a signal by the government that they were asking those who profit most to reconsider the sugar, versus placing the most direct burden on consumers. This was not done, but it is not too late. In jurisdictions with this form of tax, industry has reformulated beverages to lower the sugar content, which can reduce their harms.

Newfoundland and Labrador is the first major jurisdiction to enact a soda tax in Canada. We will all be watching.

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