Sugar tax: a conscience cleanser for soft drink makers or a catalyst for public health?

Recently, news of Singapore’s sugary drink grading system and its impending ban on advertising for bubble tea and fruit juices has sparked heated debate in China.

● From 30 December 2022, Singapore introduced the Nutri-Grade classification system to help consumers identify the sugar and saturated fat content in drinks. Source: Today Online

In fact, Singapore is not the first country to intervene in the sale of sugar-sweetened beverages. Over a decade ago, policymakers began introducing regulations on sugary drinks, with taxation proving to be among the most effective measures. Statistics show that more than 80 countries and territories worldwide now impose a sugar tax.

In March 2016, the UK government announced the introduction of the Soft Drinks Industry Levy (SDIL) across the country, imposing a tax on drinks with a sugar content exceeding 5g/100ml and confirming that the levy would come into force in April 2018. It was widely regarded as the most extensive sugar tax ever implemented by a developed nation.

What does 5g/100ml actually represent? The sugar content in classic Coca-Cola is more than double this threshold, at 10.6g/100ml. Sprite contains slightly less, yet still reaches a substantial 8.6g/100ml.

● Next time you buy a fizzy drink, why not check the ingredients list to work out the sugar content.

But hold on, what’s the harm in enjoying a fizzy drink? Why go to such great lengths to tax sugar-sweetened beverages? What dangers do they pose to public health? The story, however, begins with “sugar” itself.

I.The “Toxic” Sugar

We have heard more than enough about the health risks of sugar consumption.

In fact, “sugar” occurs naturally in carbohydrate-rich foods such as fruits, vegetables, and whole grains. Released through normal digestion, it provides a steady supply of energy to our cells, serving as a vital foundation for our physical stamina and vitality.

Sugar itself is not to blame. It only begins to “run rampant” when the modern food industry extracts it with ease, then, driven by profit, adds it in ever-increasing quantities to all sorts of processed foods, turning it into a ticking time bomb for human health.

These two fundamentally different forms of sugar intake are known as intrinsic sugars (Intrinsic sugar) and free sugars (Free sugar). If you make a habit of checking ingredients lists, you will notice that the sugars commonly found in soft drinks—such as white sugar, high-fructose corn syrup, and concentrated fruit juice—all belong to the category of free sugars.

● Consuming fresh fruit and vegetables directly provides endogenous sugars; in contrast, ingredients such as high-fructose corn syrup and concentrated lime juice found in certain sugar-sweetened drinks are classified as free sugars, often also referred to as added sugars.

The World Health Organization (WHO) explicitly identifies free sugar consumption as a major factor driving the global rise in obesity and diabetes. Unlike endogenous sugars found naturally in foods, excessive dietary free sugars cause sharp spikes in blood glucose and insulin levels, significantly increasing the risk of overweight, tooth decay, and other health conditions.

Among all sources of free sugar, sugar-sweetened beverages (SSBs) carry the starkest health warnings. The WHO notes that drinks high in free sugars are likely a primary cause of excessive calorie intake in modern society, particularly among children and young people. Worldwide, an estimated 184,000 deaths each year are attributable to the consumption of sugar-sweetened beverages.

● The WHO recommends that daily free sugar intake should be kept below 10 per cent of total energy requirements, ideally reduced to 5 per cent. This roughly translates to 22 grams, meaning it is best to limit yourself to no more than 250 millilitres of sugar-sweetened drinks per day.

With public health in mind, it is hardly surprising that countries across the globe are introducing policies to curb sugar in sugary drinks.

II. The Big Stick: Taxing Sugary Drinks

Among the wide array of policies aimed at curbing sugar, levying a tax on sugary drinks (the SSB Tax) is the approach most favoured by policymakers.

At the end of 2022, the WHO released its first global tax guidance on sugary drinks, urging nations to raise prices through taxation to discourage consumer purchases. According to the guidelines, retail prices must increase by at least 20% to yield a corresponding fall in consumption.

Sugar levies share similarities with tobacco and alcohol taxes, both of which have a longer track record and even bear the vivid nickname: the sin tax.

The design of sin taxes is heavily informed by behavioural economics’ nudge theory. The theory posits that individuals often struggle to make fully rational choices in the marketplace, meaning external conditions must be altered—through measures such as taxation or sales bans—to steer people toward sounder economic decisions.

● As a relatively new economic theory, nudge theory remains a subject of academic debate. Some scholars argue that it expands the scope of state intervention into individual liberty, frequently sparking friction between different schools of economic thought. Image source: The Economist

The impact of taxation is self-evident, but the efficacy of “nudging” individuals is often undermined, as reality proves far more complex than economic models suggest.

Take, for example, a common question faced by sugar tax policy: if higher prices reduce sugary drink consumption, then what? Prompted by the brain’s reward system, might those with a sweet tooth simply turn to other processed foods to satisfy their cravings? At the individual level, purchasing behaviour and dietary choices remain fraught with uncertainty.

Another line of criticism challenges the very premise of nudge theory: why do individuals struggle to make rational purchasing decisions? Attributing this solely to a lack of discernment or self-discipline rings hollow. When the matter is scrutinised, the true source of the ‘sin’ is arguably the corporations that continually manufacture and market these habit-forming beverages.

●*Salt, Sugar, Fat* chronicles how a host of multinational food giants used technology, marketing, and political manoeuvring to capture markets, forcing the public to pay the price in health. *The Coca-Cola Empire*, meanwhile, lays bare the economic and social costs behind this highly successful brand.

Michael Moss’s account of Coca-Cola’s rise in *Salt, Sugar, Fat* serves as a prime example: in the 1970s, the company pushed to have its logos displayed across major American sports arenas, cinemas, amusement parks, and fairs; from the 1980s, its strategy shifted to bundling its drinks with fast-food chains; standard tactics also included optimising shelf placement to match consumer habits, offering add-on discounts, designing eye-catching packaging, and developing niche products tailored to specific demographics… Ultimately, Coca-Cola made itself “within easy reach” in every public space and retail venue.

Craving a chilled can of Coke to beat the summer heat? This seemingly “free” choice is, in reality, inescapably caught in a web of consumer traps. As for the corporations raking in massive profits from sugary beverages, they bear undeniable responsibility for the “sin” they peddle and the public health risks they create.

●In an era where sugar-reduced and sugar-free drinks dominate, Coca-Cola’s latest zero-sugar marketing gimmick is everywhere. Image: Foodthink

III. The British Sugar Tax: Cracking Down on the ‘Sin’ Industry

Implemented in April 2018, the UK’s “Soft Drinks Industry Levy” puts this approach into practice with both rigour and innovation. Rather than pursuing a strategy that simply raises retail prices, the levy bypasses consumers entirely, placing the financial burden directly on the manufacturers who single-handedly engineered this culture of consumption.

Under the regulations, manufacturers must pay a levy of 18 pence per litre (1.64 yuan) to the UK government for any drink exceeding 5g of sugar per 100ml. Where sugar content surpasses 8g per 100ml, the charge increases to 24 pence per litre (2.19 yuan). Manufacturers who ensure their products contain less than 5g of sugar per 100ml are exempt altogether.

● Diagram of the UK’s tiered soft drinks levy. Pure fruit juices without added sugar and dairy drinks with a high milk content are exempt from the charge. Source: London School of Hygiene & Tropical Medicine

From its announcement in March 2016 to its introduction in April 2018, manufacturers of sugary drinks were given a full two years to respond and reformulate their products. By lowering sugar levels, companies could sidestep rising costs and keep retail shelf prices steady.

So, how effective is a sugar levy targeted at businesses? A large-scale data assessment supported by Germany’s Institute for the Study of Labour (IZA) offered a clear affirmative in 2021.

The study, titled ‘Can a Spoonful of Sugar Tax Reduce Calorie Intake?’, thoroughly evaluated the impact of the UK’s SDIL since 2018 on the pricing, sales, reformulation, and calorie intake associated with sugary beverages. On the whole, the SDIL has cut average annual calorie consumption from sugary soft drinks by nearly 6,500 calories per person across the UK. More than 80% of this reduction stems from consumers switching to reformulated low-sugar options.

● With access to comprehensive electronic point-of-sale data from the UK soft drinks supply chain (major supermarket chains), the IZA study was able to accurately assess the tangible outcomes following the levy’s introduction.

The WHO’s guidance on sugar-sweetened beverage taxes notes that when the levy came into force in April 2018, products falling under the SDIL policy saw their sugar content drop by roughly 11% per 100 ml. Reports from HM Treasury indicate that following the SDIL’s implementation, the UK has been estimated to cut the annual addition of free sugars by around 45 million kilograms.

Furthermore, University of Cambridge research suggests that the SDIL has effectively stemmed obesity cases among older primary school pupils in England, and is highly likely to have prevented over 5,000 cases among Year 6 girls. This marks a significant stride for the UK in tackling its increasingly pressing childhood overweight crisis.

IV. A Not-So-Sweet Aftertaste

Yet, however ingeniously or intricately designed, relying on taxation to mitigate public health risks cannot resolve the fundamental conflict of interest between the food industry’s drive for profit maximisation and the imperative to safeguard public health.

The very nature of ultra-processed foods, such as sugar-sweetened beverages, is to engineer them to be inherently more addictive, prompting people to enjoy them more and keep consuming without pause. This objective is achieved by “scientifically” calibrating the thresholds for salt, fat, or sugar, ensuring the product tastes delicious while delaying the onset of fullness. This is both the secret to processed foods’ enduring popularity on supermarket shelves and the industry’s open secret.

It is true that, spurred by the SDIL policy, the vast majority of UK sugar-sweetened beverage brands took advantage of the two-year phase-in period to reformulate their recipes. However, most companies merely reduced sugar levels to just below the taxable threshold (5g/100ml). To preserve their signature high-sweetness profiles, they switched to using non-sugar sweeteners to replace the original free sugars.

But if sugar substitutes carry their own risks, where exactly lies the health benefit of these “less sugar, same sweetness” reformulations—crafted simply to sidestep the levy—when compared to the original recipes?

Indeed, last month’s WHO report, *Guidelines on non-sugar sweeteners*, directly challenged this superficial approach to sugar reduction. The report concludes that non-sugar sweeteners do not help reduce body fat in adults or children, and long-term consumption may actually increase the risk of type 2 diabetes, cardiovascular disease, and mortality in adults.

● Non-sugar sweeteners refer to all synthetic, naturally occurring, or modified non-nutritive sweeteners, excluding sugar derivatives such as sugar alcohols and low-calorie sugars. Pictured is aspartame, an artificial sweetener that has recently sparked considerable debate. Image: Web screenshot

These new guidelines will inevitably prompt the relevant food sectors to adjust and respond to their sugar-containing product lines. But more crucially, the health risks associated with non-sugar sweeteners highlight a fundamental truth: of all the strategies for cutting sugar, the most effective is simply to reduce sweetness intake and eat fewer processed foods.

After all, drinking low-sugar soft drinks that food companies are so keen to push is by no means the ultimate solution for good health. Instead, making natural, fresh, and minimally processed foods the foundation of our daily diet should be the norm.