Impact Of Sugar On Obesity

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Impact of Sugar on Obesity
DENISE BUTTIGIEG FITENI
Scientific Article
2017/8

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Introduction
There is a growing interest in the idea of taxing sugar for the purpose of reducing
obesity rates. Obesity along with its chronic illnesses are growing and costly health problem
that affects both developing and developed nations. In fact, since 1980, the obesity rates have
almost tripled, hence predisposing the population to hypertension and diabetes, which have
almost doubled (Gracner, 2015; Johnson et al., 2012). One of the solutions that have been
proposed is imposing sugar tax. In effect, taxes will raise the price of the targeted product and
lead to a decline in sales. The decline in sales leads to individuals consuming fewer calories,
which reduces the prevalence and the health threat of obesity. There is need of controlling
obesity primarily because it is a condition that is related to various adverse health conditions.
By mitigating obesity, fewer people become ill. Importantly, the economic justification for
increasing taxes to curb obesity is that illnesses that are a result of obesity impose a
“spillover” costs and externalities on the rest of the society.
Taxing soft drinks and sugary food has proved to be less efficient as dozens of
authorities have experimented with such taxes and the results have not been positive, thereby
making it hard to control obesity by taxing food and soft drinks. This is because the demand
for snacks, sugary drinks, and fatty foods is often inelastic and people tend to be
unresponsive to price hikes, which consequently does not have a significant change in the
shopping habits (Han & Powell, 2011; Brownell and Frieden, 2009). Besides, consumers look
for switching options mainly to cheaper brands, which consequently leads to the consumption
of inferior goods instead of lowering the consumption of fewer calories. As such, the purpose
of this current paper is to address the issue of obesity through taxing sugar as opposed to
sugary foods and soft drinks, which is a better option, as it leads to better results of
controlling what people consume based on increased prices of final products, decreased

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consumption of sugary foods and soft drinks, and ultimately better health, which emanates
from decreased obesity in the population.
Obesity Issue
Globally, it is estimated that over 600 million adults were obese in 2014 while 42
million children aged below five were obese or overweight in 2013 (Senthilingam, 2016). As
Senthilingam (2016) articulates, the numbers among children are projected to rise to 7 million
by 2025, as well as one in five adults being obese, that is if nothing changes. In effect, this
has prompted the influx of taxes to curb obesity, which is increasingly becoming a public
health emergency and is fueled by the overconsumption of foods high in sugar (Lin, Smith,
Lee, and Hall, 2011; Andreyeva, Chaloupka, and Brownell, 2011). Taxes are just an example
of the many measures adopted to control overconsumption of sugar. Others include food
labelling so that individuals know the amount of sugar they are consuming, marketing
restrictions, as well as restricting the availability of sugary foods and drinks in schools. Taxes
have many advocates primarily because when the government imposes sugar tax, it is sending
a message that the consumption of sugar is dangerous. Some of the places where sugar tax
has been applied is Mexico.
How Sugar Tax Works and its Influence on Obesity
Sugar tax raises the price of sugar. In a bid to cover the increase in sugar prices the
companies increase the price of products, which leads to fewer sales. Fewer sales
consequently lead to fewer calorie consumption, which results in less obesity, and finally
better health (Snowdon, 2016; Stanhope, (2016). For this reason, each link in the chain of
these events leads to the next, and hence, campaigners portray taxation as a way of reducing
obesity-related diseases. However, looking closely at these events it becomes apparent that if
the assumptions are incorrect, it will lead to a breakdown of the chain. As such, this model

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only works if the consumers behave in a manner that the campaigners want them to, but this
is just an assumption, and hence it may be far from certain.
However, there are a variety of ways that the chain from taxation to better health can
break down. For instance, businesses can absorb the tax instead of passing it to the consumers
in the form of inflating the prices for the end products (Snowdon, 2016). If the prices for
these sugar commodities do not raise the profits of the industry will decline but the sales do
not fall. Another scenario is that the industry absorbs the tax but the consumers value the
product enough such that they are willing to absorb higher prices through making cuts in
other parts of the household budget (Dharmasena and Capps, 2012; Edwards, 2011). Instead
of buying fewer products, consumers with inelastic demand spend less on other products, and
thus, they only buy less and not completely buy (Snowdon, 2016). Another scenario is that
the consumers respond to the tax mainly by switching to brands that are cheaper or shop in
outlets that sell the products cheaper. In this scenario, once the tax is levied at a high rate, it
may drive consumers towards black market. Those consumers who shift to cheaper brands
consequently suffer a welfare loss as they consume inferior goods but will consume fewer
calories hence lessening their likelihood to develop obesity. Lastly, as Snowdon (2016)
purports, consumers can switch to buying less of the targeted product but buy more of high-
calorie goods. For instance, they may consume less lemonade but buy more beer, or they may
even purchase less cola but more of chocolate. In effect, this substitution effect can only lead
to fewer sales of one product without achieving the end goal of reducing the calorie
consumption.
Governments that have successfully imposed sugar tax have had positive effects on
the reduction of obesity. For instance, it has been implemented in Mexico where the
government instituted a 10% tax on sugary drinks, including soda and juice in 2013, which
resulted in a 10% rise in the cost of sugary products in 2014 (Colchero, Popkin, Rivera, &

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Ng, 2016; Qi et al., 2012). The authors also revealed that the purchases of sugar-laced
beverages fell by 6% after it was implemented while the sales on non-taxed beverages and
water rose by 4%. For this reason, sugar tax in the Mexican case reduced the consumption of
sugar products, which can ultimately lead to the reduction of obesity among the Mexican
population. According to Colchero et al. (2916), sugar tax applied in Mexico was associated
with reductions in purchases of taxed beverages, as well as increases in purchases of untaxed
beverages. The authors recommended that continued monitoring is essential in understanding
the effect of sugar tax in the longer term primarily because it is a new concept, as well as look
into the potential substitutions and health implications. The results of Mexico revealed that in
the short term, sugar tax, especially on beverages is passed onto the prices to consumers, who
consequently reduced their purchases on the taxed commodities. The reductions became
larger over time, however the purchases on products that had been exempted from sugar tax
increased. For this reason, it can be derived that sugar tax in the Mexican case provided
unintended consequence as consumers switched on goods that had no sugar tax. This was
mainly in the short-term, and thus, observations have to be made in the longer-term.
Therefore, the industry is sometimes capable of absorbing some or all of the tax
without raising prices, and experience has revealed that businesses are more likely to increase
the profits by increasing the prices beyond what is required in accommodating the tax. For
instance, when Berkeley, California introduced sugar tax in 2015, researchers Cawley and
Frisvold (2015) found out that the retail prices augmented by less than half of the sugar tax
amount. However, this contrasts with earlier literature on the passing through of taxes from
businesses to consumers which highlighted full or over shifting of taxes. Cawley and Frisvold
(2015) attributed the Berkeley effect to the price competition experienced from the
neighboring areas that had no soda tax. In France, Finland, and Denmark, sugar tax was
associated with an increase in prices that were higher than the anticipated in comparison to

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the rate of tax (European Competitiveness and Sustainable Industrial Policy Consortium
(ECSIP), 2014). Similarly, Grogger (2015) provided a preliminary finding from Mexico that
highlighted that prices for sugar commodities jumped more compared to the tax amount. Due
to the increase in price due to sugar tax, this will lead to increase in the price of sugary
commodities, which will reduce the consumption of calories, and thereby help reduce
instances of obesity. In essence, this is because consumers will buy less of the commodities,
and thus, consume less sugar leading to better health and a significant reduction in the cases
of obesity among children and adults. This is supported by a study by Powell, Chriqui, Khan,
Wada, and Chaloupka (2013) which examined the impact of taxes and subsidies in improving
public health. They provided evidence that showed that a tax of 20% on sugary drinks led to
the reduction in consumption of around 20%, thereby preventing obesity.
In another study by Briggs et al. (2013), supported the idea of a sugar tax. They
pointed out that a 20% sales tax on sugary drinks is predicted to reduce the number of adults
in the U.K. who are predominantly obese by about 1.3% and the number of those persons
who are overweight by 0.9%. Essentially, they pointed out that the tax would predominantly
affect individuals aged below 30 years and who are major consumers of sugary drinks. They
also advanced that the impact on obesity is estimated to be similar for each constituent
country in the U.K., and also increased revenue from the tax. However, the findings were
only true for people who can take the sugar-sweetened beverages as there were no greater
health gains among groups who were poorer. For this reason, it can be derived that indeed
sugar tax can work, but only for the groups who consume foods and drinks that have sugar.
Besides Ruff and Zhen (2015) articulated that sugar tax leads to a reduction in the intake of
calories in the population in their study, which they carried out in New York City. They
posited that an estimated 50% of overall body weight loss was achieved in the first year, and
a further 95% in five years, and thus, the results revealed that there was a consistent but

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insignificant decrease in the prevalence of obesity. Ruff and Zhen (2015) recommended that
taxes should be augmented with other viable strategies and interventions to maximize the
effects of sugar taxes on obesity.
According to Snowdon (2016), sugary drinks provide only a small fraction of the
population’s energy intake, which is estimated to be 3% in Britain, and only people aged 11-
18 years consume them disproportionately, and thus, sugar tax will have a significant effect
on reducing the levels of obesity. Even though most studies advocate that sugar tax will lead
to an increase in prices to sugary products, leading to less consumption, other researchers
oppose this assertion. For instance, Fitts and Vader (2013) in their research posited that their
research did not support the theory that sugar taxes have a negative effect on the body-mass
index. In support of Fitts and Vader, Powell, Chriqui, and Chaloupka (2009), also found out
that there were no statistically significant associations between the state levels soda taxes and
the body-mass index. In another study by Han and Powell (2011), they found that changes in
the prices of sugary commodities had no significant effect on the obesity rates.
Literature also suggests that many of the sugar taxes and sugary drinks commodities,
for example, in the USA, are not large enough to have a measurable effect on rates of obesity.
Even so, when Fletcher, Frisvold, and Tefft (2014) conducted a study on US authorities
where soda tax was implemented, they still found no effect. Fletcher et al. (2014) and
Ebbeling et al. (2012) argued that their results cast doubt on assumptions of large soda taxes
proponents made on the impact they had on the weight of the population. They also
highlighted that their results suggested a fundamental change to policy proposals that rely on
large soda taxes to be a key component in reducing the weight of the population, which was
further supported by substitution patterns in response to soda taxes that counter and offset
calorific reductions on sugary drinks consumption. Besides, Fletcher et al.’s study were
further supported by the evidence available in Europe. For example, a European Commission

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review conducted in 2014 provided evidence that taxes are only levied on products, which
only represents a small percentage of consumption of the nutrients or products targeted, and
also that there are yet robust conclusions on the impact of taxes on public health (ECSIP,
2014). For this reason, sugar tax on beverages do not seem to lower the calorific consumption
among the population, and taxes are not effective in reducing instances of obesity. However,
in light of these findings, imposing sugar tax can subsequently lead to increase in prices of all
products, even for the substitute products, which may ultimately lead to a reduction of the
obesity rates among the population.
Conclusion
Sugar tax to some extent helps combat obesity as it lowers consumption of sugary
products. Since the high consumption of sugar leads to obesity, a strong case can be made for
efforts geared towards reducing consumption, and this includes imposing sugar tax.
Essentially, imposing sugar tax will have a spill-over effect on businesses that manufacture
sugary drinks and foods, which is often by increasing the prices of these commodities.
Increasing the price will, therefore, lead to reduced consumption, which will result in a
reduction in the number of obesity rates in the population due to the reduced purchase of the
sugary products and drinks. This is opposed to the implementation of a sugar tax on finished
products as the consumers can switch to other cheaper products among other substitutes
which consequently will not lower consumption hence no effect on the obesity rates.
Even so, sugar tax is highly regressive because the poor tend to spend their income on
relevant products compared to the rich. For this reason, to justify the efficacy of tax there
needs to be a strong evidence that the poor will become more price sensitive. In essence,
sugar tax is supposed to work by making the commodities more expensive, which will
theoretically reduce the expenditure of sugary products, and thus less consumption of these

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products, which will finally help combat obesity. Another problem is switching to substitute
products or cheaper products. In addition, it is also difficult for sugar tax to work primarily
because obese people are more likely to have a price inelastic behaviour or seek subsidies.
Besides, heaviest consumers tend to be least responsive to price changes on products. As
such, it can be concluded that there are opposing views on the effectiveness of sugar tax in
combatting obesity, and further research is needed to provide more evidence. However, based
on the evidence available, it is clear that sugar tax will to some extent lead to decreased
consumption of sugary goods, which helps reduce obesity.

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