: Should the government take tax revenue from socially problematic products?
Placing ‘sin taxes’ on what we eat and drink, including alcoholic beverages, and gambling, is a controversial subject touching on some highly personal areas of our lives. But is the government right to get involved?
Taxing food and drink – the background
The figures don’t make for comfortable reading. Obesity has slashed average life expectancy in the UK by three years, and it disproportionately affects poorer communities.
In 2016, more than a quarter (29%) of Scotland’s children were at risk of becoming overweight (including obesity), while 65% of adults were overweight and 29% obese. (Source: NHS Scotland.) Meanwhile, in England, a third of 10 and 11-year-olds are overweight.
Unhealthy diet and inactivity are among the preventable causes of 50% of chronic diseases and 40% of cancers. And 90% of the public said they support government working with industry to make food and drinks healthier.
Sugary drinks and fast food
A recent British Medical Journal study made a positive link between the risk of overall cancer, including breast cancer, and sugary drink consumption – although these results would need to be replicated in other large-scale surveys.
One 200m juice pouch contains five sugar cubes – the recommended daily intake for 4 to 6-year-olds; while 330ml of cola has 9 cubes, or two more than daily the recommended intake for children aged over 11.
There’s already a ‘sugar tax’ on soft drinks, aimed at reducing consumption and introduced in April 2018. Drinks with a sugar content of over 5g per 100ml are taxed at 18p a litre; drinks above 8g per 100ml at 24p. Milk, pure fruit juices and the smaller producers remain untaxed.
A similar levy operates in Mexico and Hungary, where it has been highly effective, and in France and Finland, while in Norway chocolate is also taxed.
Fast food, slow killer?
We’re all eating more on the move, turning to ready meals, or ordering takeaways from apps on our phones.
But much of this kind of food is packed with salt and fats, while a study in France has linked heavily processed foods to a greater risk of dying early. Another suggested fast food outlets on commuter routes are fuelling the obesity crisis.
At Christmas time, it can get even more extreme, with some High Street chains selling seasonal hot chocolates and lattes containing up to 23 spoonfuls of sugar a cup. Adults should have no more than seven added teaspoons a day.
Last year, the then chief medical officer Professor Dame Sally Davies, the most senior government adviser on public health, said the food industry had ‘failed the public,’ and called for taxes on unhealthy food high in salt and sugar. (She also wanted to ban snacking on public transport, which was highly controversial.)
Davies also said voluntary targets set by Public Health England to make products healthier hadn’t been met.
The case against
While some argue the current levy doesn’t go far enough, Conservative MP for Colchester William Quince described the sugar tax as “patronising, regressive and the nanny state at its worst.” He is not alone in believing that the government shouldn’t dictate what people can or can’t eat and drink. Some insist on individual responsibility, and the role of schools and parents in ensuring children eat and drink sensibly.
Others stress that taxing may not shape consumer behaviour as effectively as portion control, and affects poorer people disproportionately.
Another argument is that it may be better to work together with the food and drink industry rather than taxing it. For its part, the industry says changes cannot happen overnight – and it claims to be already making progress without taxes. It adds that sugar in food isn’t just about sweetness, but also about texture, colour and consistency.
Meanwhile, health campaigners say the tax is ineffective unless there are also levies on chocolate, sweets and confectionery.
Finally, a study at Glasgow University found fat intake would also be crucial in reducing obesity, so focusing on sugar alone confuses consumers.
Nearly a quarter (24%) of adults in England and Scotland regularly drink over the Chief Medical Officer’s low-risk guidelines of no more than 14 weekly units.
Recent years have also seen some huge cuts to rehab services – with researchers in London describing an ‘epidemic’ of alcohol-related issues. In all, more than £100m has been cut since 2012, meaning money raised from tax is arguably needed more than ever.
There’s also an uneven picture across the UK, with those in Scotland who need treatment for alcohol-related issues more likely to receive it.
In favour of taxation
Alcohol is taxed in the form of excise duties. In the most recent budget in late2018, beer and spirits had a duty freeze, while a bottle of wine became 7p more expensive, sparkling wine 10p more.
These duties raise money for the government while helping to cover the healthcare and other costs associated with alcohol-related issues.
Public Health England says raising taxes is cost-effective, and the World Health Organisation (WHO) agrees – it has a target of reducing global alcohol consumption by 10%.
The case against
The pub industry says this hits an already struggling pub sector affected by the smoking ban and cheap supermarket sales. The Telegraph reported in February 2019 that a pub closes every 12 hours.
Again, there have been accusations of an interfering ‘nanny state’, while one survey by alcohol consumer group Drinkers’ Voice claims only 1 in 10 believe higher taxes go on helping those who abuse alcohol, making excise duties merely a ‘cash cow’ for the government.
In 2017, a Gambling Commission report found that over two million people were either addicted to gambling or at risk of developing a problem. It called on the industry and government to do more.
Problem gaming can be hidden for longer than drink or drugs addiction from family, friends and colleagues, since its outward manifestations are much less noticeable. Equally, the internet makes it a lot easier to gamble more often.
While we might all enjoy a flutter on the races or buy a lottery ticket, addictive gambling can significantly harm relationships and mental health and wellbeing, while leading to serious debt.
The Gambling Commission regulates the industry and operators rather than players are taxed. The law on gambling tax has changed regularly over the years, in keeping with the way gaming itself has changed.
From October 1 2019, online gambling on slots, casino games and similar ‘games of chance’ was upped 6% from 15% to 21%. It’s likely this will be passed on to the player in the form of different odds and return to player percentages.
Customers pay no tax in the UK on betting or any subsequent winnings.
The commission has found evidence of increased addiction among those playing Fixed-Odds Betting Terminals (FOBTs). These slots machines in betting shops allowed punters to spend up to £100 every 20 seconds. So the maximum stake was cut drastically to £2 in April this year, triggering an overhaul of gambling tax.
Lost revenue from the machine gaming duty levied on FOBTs is expected to cost the exchequer £1.15bn over five years. The Treasury will make up for the shortfall as described above.
It’s perhaps hard to think of a reason why you wouldn’t want to tax this industry, given the problems of addictive gambling, and the money raised could perhaps be used more to provide services, e.g. GAMSTOP, Gamblers Anonymous, NHS.
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