Tax idea leaves us sour

Dr Eric Crampton
The Dominion Post
14 March, 2018




But even if you were OK with that, there's another problem.

Sugar taxes of 10 or 20 per cent – the range usually advocated – simply do not affect consumption very much.

Everybody talks about how tobacco taxes have cut tobacco consumption, but let's be realistic.

The tax on a single cigarette stick is $0.83. The cheapest cigarettes I can find online are Easy Reds, at $19.90 for a pack of 20.

Each of those then has 17 cents of tobacco, and 83 cents of excise. That isn't a 10 or 20 per cent tax.

The tax is almost five times the price of the tobacco. It's the equivalent of a 488 per cent tax.

Even if the government taxed sugar as heavily as it taxes tobacco, there is still another problem.

Until vaping, if you wanted nicotine, you had to buy cigarettes.

But there are all kinds of tasty and potentially unhealthy things out there that people could shift to if there were a tax on sugar.

The effects of tax on health would then be much smaller than you might think from a naive estimation from any reduction in sugar consumption. If people flip from chocolate bars to crisps, are they really that much healthier?

Unsurprisingly, in the real world, sugar taxes have not done much to improve health.

But don't just take my word for it.







Stay in the loop: Subscribe to updates