In praise of a multitude of sin taxes for a healthy economy

Teal independent Sophie Scamps wants a ban on junk-food advertising, but why stop there? A sugar tax also hits a sweet spot for the budget and our well-being.

A sugar tax need not be pegged at the exorbitant rate of that on tobacco products to be effective. A study of the 10 per cent tax in Mexico found a nearly 8 per cent reduction in consumption. (AAP Image/Dan Peled)

New teal independent federal MP Sophie Scamps is calling for a ban on junk-food advertising, suggesting it’s fuelling an obesity epidemic among youth. She is preparing a private member’s bill limiting fast-food advertising and sponsorship.

The rise in obesity has become a global problem, especially in wealthy countries, and Australia is no exception. In fact, perhaps surprising given our sporting culture, we are one of the more obese nations among the OECD countries, which is why the Australian Medical Association supports efforts to reduce the consumption of junk food.

Scamps, an emergency doctor and former high-performance athlete, is well placed to lead such a campaign and it’s a worthy one. Perhaps she should widen her campaign to the broader community. Obesity is as prevalent among adults, causing physical and mental health problems.

Moves to ban or restrict certain types of advertising is nothing new: think cigarettes and alcohol. But media organisations bristle at such reforms, given their business model is already under threat.

Perhaps the parliament will also seek to legislate a sugar tax. Given that wider tax reform urgently is needed, debating the merits of another sin tax, allowing for less efficient taxes to be cut, could be timely.

Sin taxes aren’t new either. Designed to penalise bad behaviour, in theory they should discourage the use of products deemed harmful to individuals or society in general. So it’s no surprise the World Health Organisation supports the taxing of sugary drinks, for example, to help tackle obesity and type 2 diabetes.

Independent teal MP Dr Sophie Scamps’ maiden speech in Parliament House on August 1, 2022. Picture: NCA NewsWire / Gary Ramage

Critics in the Coalition point to a sugar tax as an example of the nanny state taking over. But in the era of Covid, lectures from the Coalition about government going too far in telling us what to do is hypocrisy.

Opponents within Labor point to the regressive nature of many sin taxes, suggesting they penalise the poor without necessarily adjusting behaviour. Many cheaper foods are high in sugar, for example. Yet we already have sin taxes on everything from gambling to smoking and alcohol, regressive taxes one and all, and no government wants to reduce these taxes. In fact, such taxes regularly go up. Taxes on beer recently did. We wait to see what the October budget throws up.

In the case of gambling, the tax is built on an industry that theoretically could be banned or substantially curtailed if politicians really wanted to stand on virtue. But prohibition has taught us doing so moves such practices underground, reducing the overall tax take of government at the same time.

This logic is why there is a push to properly legalise vaping, a harm-minimisation strategy that is taxable and would undercut underground trading in cigarettes. The same could happen with other drugs, but politicians bristle at the prospect.

It is the poorest who make the greatest health gains from the introduction of a sugar tax or a ban on junk food advertising. Labor should be mindful of that.

So why aren’t sugar taxes a live policy option? Why isn’t banning junk food likely to happen despite Scamps’s private member’s bill? Why haven’t we already banned gambling advertising or poker machines (found in almost every club and pub save for Western Australia)?

Simply put, it’s because of concerns about the pressure that might be applied by powerful industries, including the food and gambling industries, and mainstream media, which relies on the advertising revenues. That is how power and influence work in politics. Standing up to that requires bravery, a finite commodity in modern parliaments.

In a bid to stave off the prospect of a sugar tax ever becoming a reality, the soft-drink industry has started moving away from its more sugary products towards low-calorie, low-sugar alternatives. It is a chicken-or-the-egg argument to work out what came first: the moral imperative of the shift or the shift as a response to declining sales.

For their part, governments have sought to substitute better labelling and industry disclosure for consideration of a sugar tax or a ban on advertising. It’s a bad public policy decision designed for a political outcome; doing so imposes cost burdens on the sector and, let’s face it, most people don’t read food labels anyway.

The downsides to obesity are obvious: to one’s lifestyle, mental state and physical health. Given that Australia enjoys a universal healthcare system, the state – as much as, if not more than, the individual – is bearing the financial burden.

Unfortunately the arrival of the pandemic detracted from the profile given to the work of James Muecke, the 2020 Australian of the Year. He used his time in that role to try to raise awareness about the damaging impact of a high-sugar diet, engaging constructively with governments to attempt to achieve change. Perhaps he needed to take a more combative approach to hit the headlines, the approach taken by his successor. However, that’s not the style of someone as considered as Muecke.

Taxes on sugary drinks have been adopted in dozens of overseas jurisdictions. A sugar tax need not be pegged at the exorbitant rate of that on tobacco products to be effective. A study of the 10 per cent tax in Mexico found a nearly 8 per cent reduction in consumption. Surprise, surprise: sin taxes do work.

The acuteness of obesity problems in Pacific Islands nations led many of them implement sugar taxes. Britain has two tiers of sugar intensity that attract an increasing tax impost. It’s not a radical idea, even if our political leaders seem incapable of thinking outside the box.

Responding to calls for such a tax when he was prime minister, Malcolm Turnbull suggested there were enough taxes on consumption already and policy needed to concentrate on education and awareness – in other words, collect revenue from somewhere else so as to spend money to deal with a problem that, as has been shown in other countries, can be addressed with a direct financial push.

To be sure, diet and obesity are hugely complex issues. The unintended consequences of an advertising ban need to be well thought through before legislation is rushed into practice. Taxing sugar, on the other hand, is simple and proven.

Seeing the writing on the wall, the Australian Beverages Council announced plans for voluntary reductions over time. Let’s help them along with a financial incentive that will have broad social benefits and contribute to the national bottom line. Perhaps with threats of advertising bans to follow soon if they don’t get it done.

Peter van Onselen is professor of politics and public policy at the University of Western Australia and Griffith University.