Dozens of countries now tax sugary drinks but sweet-toothed Australia isn't interested

This year five countries, including Ireland, the United Kingdom and South Africa, will join 26 nations who have raised the price of sugary drinks in the hope of a healthier population.

Meanwhile, Australia - one of the fattest countries in the world - is defiantly refusing to consider a so-called "sugar tax".

The Australian sugar and beverage industries have been working hard to keep the so-called "sugar tax" off the policy table of both major political parties. "Zero chance," the Turnbull government has said.

Obesity is an international conundrum, sparking fierce policy brawls as the beverage industry attempts to slap down health groups.

Five more countries will be imposing a sugar tax in 2018.Credit: Jeff Chiu

Funnily, both parties are pointing to Mexico - one of the first to impose a substantial sugary drinks tax for health-related reasons - as a significant piece of evidence.

The truth about Mexico

In January 2014, Mexico, among the world's biggest guzzlers of soft drinks, imposed an excise tax that lifted the price of all sugary drinks, except milk, by 10 per cent to curb soaring obesity rates.

The industry, keen to protect its profits, has described it as a "dismal failure" but proponents have held it up as "real-world evidence" that the sugar tax works. So who to believe?

An analysis by Mexico's National Institute of Public Health found that purchases of sugary drinks dropped by 5.5 per cent in 2014 and 9.7 per cent the following year while purchases of untaxed drinks rose on average by 2.1 per cent over the two years.

Australia's sizeable sugar industry has been joining forces to resist a 'sugar tax'. Credit: Glenn Hunt

While it will take several years to see measurable health benefits, researchers say the drop in consumption of energy-dense, nutrient-empty drinks is an early success story, as excess kilojoule intake is a major driver of weight gain.

Illustration: Dionne Gain

But in the eyes of the Australian Beverages Council, Mexico's tax has been a failure, and a warning to the Turnbull government not to intervene in Australia's market.

In Mexico, the council said, sales are now above pre-tax levels, jobs have been lost, and the poorest families are shouldering the burden of the tax.

The council's chief executive Geoff Parker said the National Institute of Public Health's study couldn't be relied upon as it used "counterfactuals", or estimates of consumption had the tax not been implemented.

A look at the Mexican Treasury's tax receipts, he said, revealed that after a decline in 2014, sales of sugary drinks had rebounded in the second year.

"Even if accurate, the latest study shows a small reduction in soft drink in-take – 14ml less or about six calories in an average diet of over 3000 calories, equivalent to one or two small jellybeans a day," said Mr Parker.

But multiple studies using different data sources had concluded that sales were going down, said Professor Barry Popkin from the University of North Carolina and a co-author of the Mexican paper.

In further research, Professor Popkin found the tax would prevent at least 189,300 cases of type 2 diabetes and 20,400 cases of stroke and heart attacks, as well as 18,900 premature deaths over a decade.

"For such a small tax - when public health advocates and most countries are instituting a 20 per cent or higher tax - these are important benefits," he said, noting that health campaigners in Mexico were now working to double the 10 per cent tax.

A similar pattern was seen in Berkeley, California, which imposed a city-wide tax in 2014. There, a one-year analysis of the penny-per-ounce excise tax found the volume of sugary drinks sales fell by 9.6 per cent, compared to estimates if the tax wasn't in place.

What other countries are doing

So far, 26 countries, from Portugal to Thailand, have introduced a sugar tax to increase the price of sugary drinks and influence consumer behaviour as well as encourage companies to reformulate and cut sugar.

Ireland, the UK, the Philippines, Estonia and South Africa have all announced plans to join them in 2018.

Two regions - Catalan in Spain and St Helena - have also implemented a tax as have two cities in the United States, San Francisco and Seattle - joining another six US cities that already tax sugary drinks.

Saudi Arabia, a country with very few consumption taxes and no income tax, last year went a step further and enacted a whopping 50 per cent tax on soft drinks and a 100 per cent tax on energy drinks.

In the UK, the impact of the tax has been felt before its implementation. The UK Office for Budget Responsibility had to revise its revenue predictions after manufacturers began reformulating products more aggressively than expected.

In contrast to the view that taxes on sugary drinks are a progressive or left-wing preference, one new study found that most have been imposed by conservative or right-wing governments.

Meanwhile, the industry has been able to kill or stall proposals in Russia, Germany, and Cook County in the US, a country where local governments have been progressing the issue.

Australia isn't just among the fattest countries globally but also among those that purchased a "high level of calories from sugar-sweetened beverages", according to researchers at Deakin University and the George Institute for Global Health.

Australia is one of a handful of countries, along with Argentina, Canada and Germany, in greatest need of a sugar tax, say the researchers.

Indeed, ABS data indicates the average Australian consumes nearly 10 kilograms of free sugar in beverages every year.

The World Health Organisation says the tax should be 20 per cent or greater to have a strong effect.

"2017 proved to be a significant year for international sugar-sweetened beverages tax action," said Dr Kathryn Backholer, senior research fellow at Deakin University. "We expect 2018 to be equally momentous."

The lobbying wars

In response to Fairfax Media's questions about whether the government was keeping track of the latest sugar tax developments around the world, a spokesman for Federal Health Minister Greg Hunt said: "The government's position on this is clear and there has been no change."

Fearing a juggernaut of industry opposition, the Coalition, Labor and key cross benchers have all said they are against a tax. Only the Greens are willing to support one.

But pressure is growing from a coalition of 36 groups, including health, consumer and academic organisations, who are demanding a tax as well as other changes such as restricting marketing to children and making the health-star system mandatory.

In an annual report accidentally shared on Twitter before being deleted, the Australian Beverages Council revealed that the fight against a tax was "consuming vast amounts of resources" but, by lobbying politicians and bureaucrats, it had managed to keep the policy off the table.

It also revealed it had "broadened defensive lines" to stop the tax. This was the main idea, it divulged, behind the creation of a sugar roundtable, whose key members include the Canegrowers Association, Australian Sugar Milling Council and the Australian Sugar Industry Alliance.

Australia's sizeable sugar industry is a key factor for politicians, particularly in regional NSW and Queensland seats that produce and refine sugar.

The industry is working to reframe the debate from one about the perils to one about personal freedom and the fact the poorest would be hardest hit.

But researchers have calculated the annual spend on sugary drinks would rise by $30 per person, or just 60 cents a week.

"Those in disadvantaged areas will be paying slightly more but the difference is very small – only about $5 per year or 10 cents per week," said Professor Anna Peeters. "It's not the catastrophe the beverage industry talks about."

The beverage council's Geoff Parker said not only were sugar taxes discriminatory and regressive, but soft drink consumption was already on the way down. In the past 15 years, he said, there had been a 26 per cent decline in sugar contribution per person from soft drinks.

"Rather than focus on a relatively small and declining part of the diet, that is sugar from soft drinks, as a society we should be focused on understanding and embracing the concept of healthy lifestyles that include balanced diets and regular physical activity," he said.

A fat future

What both the beverage industry and health groups do agree on is that Australia has a serious obesity problem. If trends continue, the percentage of obese Australians will rise from 28 to 35 per cent by 2025.

The Obesity Policy Coalition said that if the government doesn't act, 1.75 million Australians will die prematurely from being obese or overweight in the next 30 years.

If the Australian government intervened with a 20 per cent tax, it would reduce the number of new cases of type 2 diabetes by 770 a year, heart disease by 240 a year, and stroke by 70 a year, they say.

Other benefits would include a saving of $1.73 billion in healthcare costs over the current population's lifetime, a separate study by Deakin University's Global Obesity Centre recently found.

"With two out of three Australian adults overweight, we can no longer afford to think of this as a mass failure of willpower," said the George Institute's Alexandra Jones.

"Like the 26 other countries around the world implementing taxes, we need to consider promising strategies that reshape our food environments."