Case for sugar tax on soft drinks

According to Health Promotion Board chief executive Zee Yoong Kang, two-thirds of sugar consumed here come from drinks, including fruit juice ("Fruit juice often laden with sugar, warns HPB", Nov 13, 2014).

Perhaps Singapore should introduce a sugar tax similar to the one in Britain ("Britain to impose sugar levy on soft drinks"; March 18).

Sugary drinks do not benefit consumers and could lead to health problems which are difficult to tackle.

A sugar tax would help curb the consumption of such drinks.

The objective is to improve health, because obesity and diabetes from sugar are huge health concerns in Singapore. Imposing a sugar tax might make people want to consume less sugar.

Furthermore, it has a good negative externality of making consumers pay the full social cost, while the higher tax reduces demand, raises government revenue to deal with the rising related health costs and achieves a more socially efficient level of consumption.

The overconsumption of sugar is a major cause of health problems such as Type 2 diabetes, along with obesity-related illnesses and tooth decay.

These external costs are reflected in higher costs imposed on our health service, while poor health also affects work and productivity.

Hence, the social cost of sugar consumption is greater than the private cost of sugar.

A sugar tax may create an incentive for firms to supply alternatives which are healthier.

For example, fast-food restaurants often promote sugary drinks through free refills, a case where supply creates its own demand. But if restaurants have the incentive to promote healthier drinks with lower sugar content, then consumers will follow the supply.

This would also create innovation in the beverage-making industry, as corporations would look for new less-sugary alternatives.

A sugar tax would result in higher prices that reduce demand and make healthier alternatives more attractive. Over time, higher price may change consumer drinking habits.

If the tax is based on the volume of the drinks, it may also discourage the excessive drinking that comes about due to free refills.

More low-sugar drinks would also become more common.

Sugary drinks are a choice and not a necessity.

It is not fair for taxpayers to have to help pay for the care of a person whose excessive intake of sugary drinks leads to obesity and other health problems.

Francis Cheng