Britain builds a better soda tax
Britain will soon tax sugary drinks. Whether you love that idea or hate it, you鈥檝e got to give the Brits credit: They鈥檝e designed a better version of the tax than any other government.
Beginning in 2018, the United Kingdom the equivalent of 0.75 cents per ounce for drinks that contain more than 3 teaspoons of sugar in an 8-ounce serving and a full cent per ounce for drinks with more than 5 teaspoons per serving. These tax levels are similar to the penny per ounce that Berkeley, California levies on sugary drinks.
Britain鈥檚 innovation is in the tiering. Rather than hit all sugary drinks with the same tax, as Berkeley does, Britain has three levels. Drinks with little sugar aren鈥檛 taxed at all, drinks with moderate sugar face one tax rate, and drinks with lots of sugar face a higher one. As a result, many flavored waters will escape any tax, slightly sweet iced teas will face a low tax, and regular soda will usually bear the higher tax.
This three-tier structure will encourage people and businesses to favor lower-sugar drinks over sweeter ones. That鈥檚 important because sugar content differs significantly. If you believe sugar is harmful, you should want people not only to cut back on sugary drinks, but to switch to less sugary options. And you鈥檇 want businesses to devote product development, marketing, and pricing efforts to lower-sugar options.
Linking the tax to sugar content encourages businesses to do that. Indeed, Britain is delaying the new tax until 2018 to give beverage companies time to avoid or lower the tax by reformulating their products.
Britain鈥檚 tiering is far from perfect. Why do the tax rates differ by only a third, when the difference in sugar content is often larger? Why not have more tiers鈥攐r even directly tax sugar content? Those are important questions. But they don鈥檛 diminish the fact that Britain鈥檚 approach makes much more sense than taxing sugary drinks uniformly, as Berkeley (a penny per ounce), Mexico (a peso per liter), and almost all other soda-taxing governments do. Those taxes鈥攁nd similar ones designed as sales taxes鈥攄o nothing to encourage consumers and businesses to favor lower-sugar drinks. (Hungary has a simpler two-tier system; only drinks in the same range as Britain鈥檚 upper tier get taxed.)
Soda taxes are at best . Well-designed taxes can discourage consumption of sugary drinks, which clearly contribute to obesity, diabetes, and other ills. But health depends on many factors, not just the amount of sugar one drinks. People may switch to other, tax-free alternatives like juice that also have lots of sugar. Soda taxes are regressive, falling more heavily on lower-income families. And they raise controversial questions about the role of government.
Given those concerns, reasonable people differ over whether these taxes make sense at all. If governments choose to enact them, however, they should target sugar content rather than drink volume. Britain鈥檚 tiered tax is a welcome step in that direction.
This article first appeared at .
