When told about starving French peasants who couldn’t afford bread, Marie Antoinette is infamously said to have remarked, “Let them eat cake instead.” The French revolution ended 230 years ago with her head in a basket, yet the patronising elites of the world are still as out of touch with the realities of the average person as they’ve ever been.
This time, they’ve convinced themselves that they’re looking out for us and that we need saving from ourselves—whether we like it or not, and even if it means politicising and distorting science and statistics or intruding on our freedom to make our own decisions.
This essay appears in the September edition of Quadrant.
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Taxpayer-funded health bureaucrats and activists, backed by nanny-state politicians and a particularly smug British multimillionaire celebrity chef, have now joined the global “war on obesity”. Their policy of choice is a tax on sugar that will raise the price of treats, soft drinks and common items on household grocery lists in the hope that the hapless commonfolk will ditch their soda pops and cookies for kale smoothies and eggplants. In Australia, the driving force is the Greens, who have called for a whopping 20 per cent tax on sugary foods to promote “public health” despite their own left-wing faction’s opposition to the move because these types of taxes disproportionately burden society’s poorest.
The first problem with this harebrained, expensive scheme is its perversity. Why single out sugar when sugar intakes across the Western world have been falling in recent years with changing consumer preferences and the entry of diet and sugarless alternatives into the market? We know that obesity isn’t caused by the intake of any particular ingredient or nutrient, but by a lifestyle and diet of immoderate consumption coupled with lack of physical activity. Studies comparing high and low sugar diets have found negligible difference in weight gain or weight loss where both groups had the same net caloric intake.
Despite this, a slew of American states and five countries (Denmark, France, Hungary, Mexico and Chile) have experimented with taxes on soft drinks or sugar. Not one of these places has seen a material impact on their rate of obesity, which continues to climb across the Western world. However, this hasn’t stopped sugar-tax lobbyists from peddling their narrative to the media, applying junk science and manipulating the data to suit their conclusions.
Take the example of France. The Irish Heart Foundation claims that the French tax on soft drinks, which was introduced in 2012, has caused a 3.3 per cent decline in consumption. To back the claim, they cite reports from the World Health Organisation and the UK-based National Heart Foundation. Conveniently ignored is the qualifier that these reports only consider the first five months since the tax took effect, with the WHO report explicitly noting that “the reasons for this decrease [in soft drink consumption] cannot be ascertained”. We know now that soft drink consumption in France was 4.2 per cent higher in 2015 than it was right before the tax was introduced, a significant increase even when adjusted for France’s population, which rose by barely 0.02 per cent over that time.
In Mexico, sugar-tax lobbyists and activist groups were so proud of their success that they held a widely reported press conference to announce the findings of a study which claimed that the Mexican soft-drink tax had caused a 12 per cent reduction in consumption across the populace since it was implemented in July 2014, with a 17 per cent reduction among low socio-economic groups. The non-peer-reviewed study, which just happened to be overseen by one of the tax’s strongest proponents and an adviser to the Mexican government, consisted of panel interviews and self-reported data. The actual Nielsen sales figures tell a different story. They showed that over that two-year period, soda consumption had fallen by just 182 litres in the entire country—a microscopic fraction of the 10 to 20 billion litres of soda Mexicans consume annually.
When faced with the facts, the sugar-tax lobby wised up. In 2016, they had another opportunity to sell their cause, thanks to a report from Mexico’s National Institute of Health and Welfare. At first glance, things weren’t looking so good. Yearly sales of sugary drinks averaged 18.2 billion litres between 2007 and 2013, rose to 19.4 billion litres in 2014 when the tax took effect, and again to 19.5 billion litres in 2015. Adjusted for population growth, that puts per-capita annual consumption in Mexico pre-tax at 160 litres, 162 litres in the year the tax took effect and a minuscule decrease to 161 litres the year after the tax took effect.
To overcome these inconvenient findings, the researchers claimed that the numbers had to be adjusted again because of the effects of economic growth and the influence of the weather. In other words, the actual sales data which showed negligible impact on soda consumption cannot be trusted and a comparison of the sales data to a purely hypothetical and unverifiable assumption about what the sales would have been had the tax never been put in place had to be made. This allowed the National Institute of Health and Welfare to adopt models claiming a 6 per cent decline in consumption in 2014 and an 8 per cent decline in 2015 after the tax—a success story that never happened. The soft-drink industry in Mexico has since rebounded, and the regressive tax has only served to take money out of the pockets of poorer Mexicans to line the state’s coffers.
Australians are no strangers to such tactics. Our federal budget usually contains “ten-year forecasts” predicting years of economic growth to come, often on the back of a notoriously unpredictable commodities market, and a windfall in revenue as a result which will conveniently fund all sorts of expenses and pork-barrelling in the present. Ultimately, these optimistic predictions are not always accurate, and the spending programs have only resulted in runaway national debt. By then, the reality matters little because the forecast has already done its job, forcing a future government to deal with the problem and future generations of taxpayers to foot the bill.
Now we see similar, bolder tactics applied to public health. Chile added a modest tax of approximately five cents to every 500 ml can or bottle of sugary drink in mid-2014. This year, University of York researchers studied how the tax had impacted sales patterns. Despite admitting that the data showed no significant, observable trend in cutting consumption, their paper still concluded that the minuscule tax increase had caused a whopping 21.7 per cent drop in soda sales, based upon assumptions and modelling that are not disclosed in the paper. Failing to provide these assumptions makes it difficult to question or test the reliability of the claim. This hasn’t stopped many media outlets from unquestioningly citing the 21.7 per cent figure and hailing the tax a success even though common sense says that a tax increase so small cannot be solely responsible for such a large sales drop. The result is a media win for the agenda of the nanny state and a financial loss for consumers and taxpayers, for the sake of public health outcomes that never materialise.
Indeed, in four nations which have applied a tax on sugar-sweetened drinks in recent years (Mexico, France, Denmark and Hungary) the average body mass index and obesity prevalence increased or remained stable between 2008 to 2014 with small increases in 2015 and 2016. While proponents claim that the tax may still have reduced the degree to which obesity increased, Denmark’s experience of obesity rates increasing by the same magnitude in the years after the tax was abolished seems to refute that argument. In many cases, consumers simply switch to cheaper products with the same or greater caloric content, which are often worse for them. In many American states that taxed sugary drinks, sales of beer rose.
Consumers aren’t the only ones paying for these policies. Pepsi was forced to close its factory in Pennsylvania after that state enacted its soda tax laws, resulting in the loss of nearly 100 jobs. It’s likely that the sugar industry in regional Australia, especially Queensland, will be similarly affected if Australia passes a tax on sugar.
The Menzies Research Centre found that none of the Australian papers produced in support of a sugar tax could show a material link to reducing obesity. Politicians should be pressed hard to justify a law backed by junk science that will take more money out of the pockets of working Australians who are already shouldering one of the developed world’s highest tax burdens, while trampling on our freedom of choice, culling jobs, and failing to deliver improvements in public health.
Satyajeet Marar is the Director of Policy at the Australian Taxpayers’ Alliance.