War on diabetes: Sugar tax a sweet idea

However, experience from Europe shows that ideally, such revenues would go to subsidising healthy food

I was sitting in a cafe recently, enjoying my sugar-loaded breakfast of Danish pastries and a chai latte, when I read that the Ministry of Health has declared "war on diabetes".

The irony was not lost on me. Health Minister Gan Kim Yong's comments about four Singaporeans losing a limb or appendage every day because of diabetes were particularly poignant, because my late grandmother suffered from complications linked to the disease. She had a real sweet tooth - I remember she loved her Milo extra thick, with lots of condensed milk - a genetic trait that I have obviously inherited.

Back in those days, we were of modest means and life was not easy, but on days when it all became too much, she would offer me a bar of chocolate, and the world would instantly seem a better place. Treats such as chocolate, ice cream or soft drinks were expensive, relative to our family income and also relative to the prices of consumer staples.

However, over the past 23 years, something strange has happened. According to the Singapore Department of Statistics, while the average nominal price of basics such as rice, fresh meat and vegetables has soared (more than doubling in some cases), the price of "junk food" such as a can of cola hasn't changed much at all, and a large tub of ice cream has actually become cheaper.

This is all thanks to the perverse economics of mass production. As technology has improved, we have been able to make highly processed foods cheaper, faster and tastier but, often, not healthier. At the same time, economic progress (and monetary easing) has lifted wages and land prices around the world, which have contributed to the rapidly rising cost of fresh food due to the relatively more labour- and land-intensive nature of farming compared to manufacturing.

Since 1990, the cost of meat has risen 85 per cent on average, in excess of general consumer price inflation or CPI, while confectionery and soft drinks are up less than 30 per cent (it is also interesting to note that alcohol and tobacco, which incur "sin taxes", have risen 260 per cent).

Recent major scientific reviews have all independently found evidence of a direct link between the amount of sugar consumed and the occurrence of obesity or diabetes. These studies appear to support the assertion that, in the fight against obesity and diabetes, not all calories are created equal. PHOTO: REUTERS

As a result, the fundamentals have flipped completely - the indulgent, guilty pleasures of yesteryear are today's default source of cheap and convenient calories while healthy, unadulterated eating is now a luxury that not everyone can afford. Today, 250g of KitKat chocolate, at 1,350 calories, costs $6.20 while it's $10.90 for 250g of blueberries, at 150 calories, at NTUC FairPrice. It should be no surprise, then, that obesity - and the ills that come with it, such as diabetes - is no longer just a disease of the rich but one that increasingly afflicts, and disproportionately affects, the poor.

A report last year by the United Kingdom's independently funded Fabian Commission on Food & Poverty found that "the poor are one-and-a-half times more likely to suffer from diabetes, and while child obesity is falling rapidly in high-income households, it is still unrelenting in low-income households".

It is against this backdrop that the idea of a "sugar tax" was raised by MPs here in the recent Budget debate, among other suggestions to tackle diabetes.

Countries that have such a tax include Mexico, where a 10 per cent tax on all sugary soft drinks has led to a 12 per cent decline in consumption over the past two years.

There are many criticisms of a sugar tax - the loudest of which come from the food industry. One of the most convincing is that it is unfair to single out sugar when other factors such as fat consumption, low activity levels and even genetics all contribute to obesity and related diseases like diabetes.

However, recent major scientific reviews from institutions such as University of Cambridge, Harvard and the University of California, San Francisco have all independently found evidence of a direct link between the amount of sugar consumed and the occurrence of obesity or diabetes. These studies appear to support the assertion that, in the fight against obesity and diabetes, not all calories are created equal.


Another key question is why target only consumption when a lack of activity is perhaps equally responsible for our expanding waistlines? As any person who has struggled with their weight will attest (of which I am one), it is far easier to consume calories than to burn them. It takes me less than five minutes to devour a candy bar with 250 calories, but it would take me almost half an hour to burn that off running on a treadmill at 10kmh.

Therefore, in tackling the problem of caloric surplus, it makes more sense to me to target the input rather than the output side of the equation.

Of course, there are some who will question the effectiveness of a sugar tax. Sceptics will point out that the results in Mexico, though encouraging, are based on a short-term study and consumers could easily revert to old habits once they get used to the higher prices.

However, Norway has had taxes on added sugar since 1981, and a study showed that over a seven-year period from 2001 to 2008, the average weekly consumption of soft drinks fell by a third, in stark contrast to rising consumption seen in other European countries

My fiancee and I experienced this first hand as we travelled through the Nordic country earlier this year: what struck us was not how expensive chocolates or a bottle of cola were, it was that they cost just as much - if not more - than nuts or fresh fruit. In most parts of the world, including Singapore, it is often far cheaper to buy a bag of candy than a bag of salad.

The key take-away is a lesson in basic economics: people are generally rational and respond to economic incentives and signals (that is, prices), and on the whole, market-based systems work quite well.

Issues arise, however, when (a) information is imperfect; (b) prices don't fully reflect the true cost/benefit to the consumer and those around him; or (c) the primitive part of our brain prioritises instant gratification over long-term benefit.

It is in these cases that I believe the government owes a duty to its people to recalibrate the scales: not with a view to expanding the "nanny state", but to more accurately reflect all the costs and information obscured by clever marketing and/or consumer ignorance, so that the public can make choices which are in their long-term interests (and those of society at large).

The conclusion from my own brief experience with a sugar tax while travelling in Europe is that I am in favour of it as a concept - as an admittedly flawed but crucial weapon in the war on diabetes.

However, I also believe it is necessary to use any revenues generated to subsidise healthy alternatives and fresh food, so that Singaporeans in lower-income groups are not just being slapped with a regressive tax, but rather, are being offered genuine help to adopt a healthier lifestyle.

•The writer was until recently director of Investment Companies Research at Cantor Fitzgerald in London. He is co-founder of 31-East.com, a start-up that aims to tackle waste, corruption and inefficiency in the property sector.

A version of this article appeared in the print edition of The Straits Times on May 05, 2016, with the headline 'War on diabetes: Sugar tax a sweet idea'. Subscribe