What about a sugar tax?

Keith Hudson

I see from my newspaper today that George Freeman, the Life Sciences Minister, suggests that the government should impose a sugar tax on chocolatiers, baked bean canners, fruit drink containerisers, process food manufacturers . . . and many others who know that, because of our past African savannah background when both beehives and fruit trees were scarcely to be found, that we had no need to evolve genetic resistance to sucrose, one of the most disease-inducing chemicals known to man, and even worse than ethyl alcohol to which plenty of cultural resistance against over-indulgence has been able to develop during thousands of years of civilization.

But against sugar, we have no resistance, genetic or cultural, when considering the country as a whole.  In this country, 25% of adults, or 2 million people, are obese (we are even worse than America!), compared with fewer than 3% in the 1970s. The proportion is expected to grow to more than 30% within a decade or so.

To briefly interpolate another modern phenomenon — which, because it’s hugely important, I frequently write about — the pulling away of a separate, prosperous self-breeding sub-population of about 15% of the total population in this country, obesity is one clear cultural dividing line between it and the rest.  Obesity is scarcely to be found among the 10 million social elite because, generally, they are more intelligent than the rest of the population, and peer pressure within this minority culture will take care of the rest who aren’t quite up to scratch in being persuaded by scientific findings.

Because the over-consumption of sugar by most of us in the less intelligent of the advanced countries, such as this country and America, is causing us to be plagued with obesity and a host of other mid-life by-products, such as type 2 diabetes, many cancers and serious heart conditions, then health care costs are shooting up exponentially.  In this country the costs of our National Health Service are rising at a rate of something like �1 billion every year, for which obesity is mostly to blame.  Obesity threaten to sink the whole health care apparatus before too long.

Such a sugar tax, if it were deployed, would be what is called a Pigou tax.  This type of tax is named after a quiet, unassuming Cambridge University professor, Arthur Pigou.  He was a contemporary of John Maynard Keynes and was one of those economists who criticised his grand Theory as quackery and the product of a mind which, from young manhood onwards, was only happy when contradicting as many authorities as he could.  In the case of The General Theory of Employment, Interest and Money, Keynes set out to demolish the theories of earlier classical economists such as Adam Smith, implying that they weren’t up to his high intellectual standards.

A Pigou tax is a tax that is applied to specific goods or services of which their production causes ancillary damage to other people or the environment.  The consumption of more than a few grams of sugar a day — a splendid food when kept down to this level —  causes diseases such as those that have been mentoned abkve,  and therefore — so the argument goes — should be taxed in order to reduce its presence in much of the food we eat.

In fact, virtually everything we in the advanced countries buy, unless we are very poor, has adverse consequences on the earth’s environment and on other people — simply becausee most people on earth are poor in comparison to us.  Therefore the only Pigou tax that should be applied is a Status Tax, as a flat tax on the price of everything we buy that’s visible to other people — that is, on everything except food (that is, food that’s bought for home consumption) and underwear (to be pedantic!).

Surprisingly, this means that everybody would be willing to pay such a naturally progressive rank-order tax, especially the rich, who already pay premium prices for luxury goods that they like to display.  Implicitly paying a lot of tax, when buying mansions in the countryside or luxury yachts or gold watches, the rich would therefore consolidate the high status that they lay claim to — and that the rest of us, being instinctively deferential, are usually only too willing to acknowledge in this materialistic age.

Such a Pigou tax should be applied to government’s past year’s spending, not next year’s estimates (to avoid gratuitous controversy), so that every item can be identified and, if necessary, vigorously challenged on scientific grounds by the electorate if its continuation is suspected.  This means that, in the case of atmospheric carbon dioxide abatement, for example, if the government is also carried away by the currrent hysteria on the subject, specific expenditures under this item would have to be justified to the penny.

Coming back to Freeman’s proposal, it will never get off the ground because the sugar industry and all the many associated manufacturers of foods containing sugar, will mount huge resistance and even cause them to threaten to withdraw those many perquisities and favours they already give to politicians.  We, the public, would never hear of the row that this proposal would cause if it were seriously taken further because it would take place in private offices in Whitehall.  But, of course, it is merely a threat on the part of a government minister designed to encourage manufacturers to use less sugar.

And they’ll probably do so — just a little.  Tesco has already obliged in the fruit juices and cordials they sell.  But manufacturers won’t reduce sugar too far because it has such an attractive taste that it’s irresistible.  Any food manufacturer who reduced sugar content in an item a little too far would find that other competitors who made the same item would trounce him in its sales.

A Pigou tax on sugar would not be desirable because the public couldn’t keep track of the total tax that would be paid and of the specific medical costs of the obesity that it would be paying for, nor even the manufacturers, the wbole situation being so compledx that the tax would just be another tax that has been added onto the ad hoc collection that has accumulated since taxes started just over 200 years ago to pay for the costs of the Napoleonic Wars but have continued ever since to pay for a growing civil service .

If there’s to  be a PIgou tax let it be a tax as intimated above — applied to almost everything we buy.  In that way, the onus is then on the government to justify the specific rate of tax in any current year and every cost is clearly labelled instead of relying on a system that’s so complex that none of us has any idea of the hidden items in the so-called ‘progressive’ personal taxes we are paying but which also, in fact, benefits the rich and the middle class against those on low earnings.

One thought on “What about a sugar tax?

  1. Hi, Keith:

    Last fall, we instituted a sugared beverage tax here in Berkeley: http://www.wsj.com/articles/berkeley-voters-approve-tax-on-sugary-drinks-san-francisco-ban-falls-short-1415189224. The big soft drink companies and beverage industry tried to influence the elections with negative ads (and probably funding), but it didn’t work. San Francisco also tried to pass a tax, but they needed a 2/3 vote of the population for it to pass: http://www.sfexaminer.com/sanfrancisco/sugary-drink-tax-measure-fails/Content?oid=2911239.

    Cheers,
    Helene

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