Canada Might Be About to Do the Sugar Tax Thing

And we know they're right about basically everything, so...
March 27, 2017, 4:48pm
Ruth Black / Stocksy

Excess sugar is the devil. That's not an opinion—at this point, that's science. Health advocates in several countries say a sugar tax—like levies on booze and tobacco—is key to trimming our obesity epidemic. But plenty of other people feel uncomfortable about the idea of lawmakers nosing their way into our dessert.

Sugar is the new societal sin, going the way of tobacco and alcohol before it, into the sights of the tax man. The government of the Northwest Territories in Canada is the latest to look at a so-called "sin tax" on sugary drinks in an effort to curb consumption. One in three residents of the territory is clinically obese, according to Statistics Canada, and one in ten adults over age 24 have diabetes—both well above the Canadian average.

"In the Northwest Territories, high rates of diabetes and obesity place a significant burden on the healthcare system, and on the well-being of Northwest Territories residents," says Larry Frolick, head of communications for the NWT Finance Department. "Furthermore, soft drink consumption by Northwest Territories' children is above the national average. The intention is to introduce a sugary drink tax in 2018-19."

Officially, the territorial government is "investigating" the tax. If it goes ahead, NWT will become the first in Canada to implement a sugar tax, joining just a handful of jurisdictions around the world.

Sugary drinks are blamed for up to 180,000 deaths worldwide each year, 133,000 of them from diabetes. In Canada, the study found about 1,600 deaths a year linked to excessive consumption of sugar-sweetened beverages. In the United States, the rate was almost double per capita, linked to 25,000 deaths annually.

Last year, the World Health Organization called for a 20 percent levy on sugar-sweetened beverages. There's reason to believe this yields results: Take Mexico, where a tax on sugar and fatty foods was introduced in 2014. They pay one peso (about six cents) per liter in tax on sugary beverages and 8 percent extra tax on junk foods like chips, cookies, candy and ice cream. In the first year of their sugar tax, consumption of sugar-sweetened beverages dropped an average of 6 percent, according to a study published in the British Medical Journal. The decline was most pronounced among low-income households, which reduced intake by more than 9 percent. At the same time, sales of untaxed beverages—mostly water—jumped 4 percent, the study found. It's too early to say whether the sugar diet has actually had any effect on Mexican waistlines and proponents say it will take some time to see results. 

Hungary introduced a tax of about 24 cents per liter on their sugar-sweetened beverages, energy drinks, confectionery, salted snacks, condiments, flavored alcohol and fruit jams in 2011. Two years later, sales of those products dropped by a large 27 percent, according to the World Health Organization. More importantly, manufacturers substantially reformulated their products to avoid the tax—meaning they made their products healthier. While critics decry the Big Brother approach, these lighter Hungarian libations speak volumes.

France and Belgium tax sugar-sweetened beverages and last fall, the British government announced it would follow suit beginning next year. In the US, the city of Berkeley, California, brought in a sugar tax in 2015, and Philadelphia followed suit at the start of this year. Illinois is considering the first statewide sugar tax in the US, even after failed attempts federally in Washington state, New York and Maine.

The billion-dollar global beverage industry is not sitting idly by while the world sours on their products. In Canada, it's a $6 billion business that employs 20,000 people, according to the association. The Canadian Beverage Association has nine lobbyists currently active in Ottawa. Jim Goetz, president, has been in touch with at least 124 members of Parliament, policy advisers, deputy ministers, ministers and other top bureaucrats over the past 12 months, including health minister Jane Philpott. And the lobbyists will all be meeting with NWT lawmakers in the coming months.

"We make up a very small percentage of Canadians' caloric intake," Goetz tells me, in the range of 5 to 7 percent. And that has been on the decline for more than a decade, he adds, dropping 20 percent from 2004 to 2014. The industry has taken it upon itself to cut calories, focus marketing on low- and no-calorie options, and reduce package sizes, Goetz says. "The beverage industry is doing its part more so than certain other sectors of the food and beverage world."

Denmark announced and then abandoned plans for a sugar tax in 2012, after its coinciding fat tax was blamed for job losses. Even proponents of a sugar tax admit it is not a panacea. Comparing beverages to tobacco is "nonsensical," Goetz says. The effectiveness of a tax in actually slimming our ever-expanding waistlines is very much still up for debate, he says.

A study from the Journal of Diabetes Science and Technology suggests otherwise: Just as the tobacco tax has been a catalyst in the decline in related diseases, "a tax on high-calorie, sugar-sweetened beverages can help reduce the prevalence of obesity and obesity-related medical complications," the researchers wrote. If all goes as planned, we'll be able to confirm or deny these projections soon.