Prospects of sugar-sweetened beverages taxation: Sour consequences or sweet solution?

In the ongoing battle against rising rates of obesity and diet-related diseases, the ubiquitous consumption of sugary drinks has soared ever so highly over the past few decades that the idea of taxing sugar-sweetened beverages (SSBs) has gained momentum worldwide.

Proponents argue that such taxation could be a sweet solution to a “bitter” health crisis. 

However, as the government (through the Ghana Revenue Authority [GRA]) grapples with the intricacies of implementing the Excise Duty Amendment Act, 2023 (Act 1093) – which imposes a 20 per cent tax on sugar-sweetened beverages (including flavoured juice drinks, fruity beverages, sweetened tea, sodas and energy drinks), – the prospects of SSB taxation has sparked intense public debates and industry opposition.

Yet, this policy intervention presents promising prospects for curbing sugar consumption and improving public health.

Rationale

The rationale behind SSB taxation is rooted in its potential to address a pressing public health issue.

 The global consumption of sugary drinks has soared over the past few decades, contributing significantly to the obesity epidemic.

SSBs are linked to an increased risk of chronic conditions such as type 2 diabetes, heart disease and dental problems.

Taxing these beverages is seen as a way to reduce consumption, especially among high-risk groups such as children and low-income individuals.

Sugary drink crisis

The consumption of SSBs, including sodas, energy drinks and fruit-flavoured beverages, has become a universal phenomenon in Ghana.

Working adults resort to energy drinks instead of a lunchtime meal; children leave the homes with at least a pack of sugary drinks in their bags as snacks each school day; adolescents and young people use their stipends to buy various SSBs as a status symbol to impress their peers while even the elderly are more and more “addicted” to the convenience their meal replacement sugary drinks options offer (due to their limited mobility and mastication).

But these beverages are laden with added sugars that contribute to excessive calorie intake and a host of other health problems.

Indeed, high sugar consumption has been linked to obesity, Type 2 diabetes, heart disease and dental cavities, making it a major public health concern.

Evidence

Several countries have already implemented SSB taxes with varying degrees of success.

Mexico, often cited as a success story, saw a significant drop in SSB consumption following the introduction of a tax. 

In the United Kingdom, the introduction of a sugar tax on soft drinks prompted beverage companies to reformulate their products, reducing sugar content and offering healthier alternatives.

This demonstrates that taxation can drive industry innovation and ultimately benefit consumers.

Meanwhile in the United States, where SSB taxes are primarily at the city or state level, the impact has been more mixed. 

Philadelphia, for instance, reported both reduced consumption and increased tax revenue, while other areas faced resistance and legal challenges.

This shows that not all SSB tax implementations have been equally successful.

Some regions have faced challenges with tax design, enforcement and industry pushback.

Theoretically, SSB taxes increase the price of these unhealthy sugary drinks which nudge consumers toward making healthier choices.

Roadblocks/challenges

While the public health benefits are evident, SSB taxation is not without its challenges.

The beverage industry, a formidable opponent, has vehemently resisted such measures.

Industry stakeholders argue that SSB taxes threaten jobs, hurt local economies and unfairly burden consumers.

Critics argue that SSB taxes are inherently unfair because they take a larger share of income from low-income households.

These concerns are not to be dismissed lightly, but they must be weighed against the staggering healthcare costs associated with diet-related diseases.

Regressively, in particular, is a valid concern.

 To address this, some proposals suggest using tax revenue to fund health programmes that benefit vulnerable populations.

The potential for unintended consequences of SSB taxation exist.

In places where SSB taxes were implemented, consumers tended to switch to untaxed, but equally unhealthy, alternatives.

In addition, focus solely on SSBs can divert attention from more general dietary issues, reinforcing the misunderstanding that targeting a single product can solve complex health problems.

Path forward/balanced approach

As the Government charts this course in addressing the SSB conundrum, it's crucial to recognise that taxation alone cannot be a panacea.

Comprehensive strategies that include public education, improved food labelling and incentives for healthier choices are equally important.

Therefore, Ghana’s SSB taxation ought to be intertwined with the broader discussions on public health, economics and social equity.

Simply put, we must strive to balance fiscal and health goals.

SSB taxes can generate substantial revenue that can be reinvested in health promotion, infrastructure or programmes aimed at mitigating the effects of unhealthy diets.

However, this hinges on effective revenue allocation and transparency.

Exemptions for small businesses, and the potential regressive impact on low-income consumers.

 Public health advocates should collaborate with industry stakeholders to find common ground and foster innovation in the production of healthier beverages.

Conclusion

In conclusion, the prospects of SSB taxation are neither entirely sweet nor sour but instead a promising step in the fight against diet-related diseases.

While challenges persist, the evidence suggests that thoughtfully designed and implemented taxation (as the Ghanaian example is modelled to be) can drive positive changes in consumer behaviour, improve public health outcomes and provide a sustainable source of revenue for health initiatives.

True success, however, will rest on public acceptance and ongoing evaluation.

Additionally, these SSB taxes must be carefully interwoven into a more comprehensive and balanced national approach to tackling the multifaceted challenges of obesity and diet-related diseases. 

Only then can we hope to achieve a healthier, sweeter future for all through SSB taxation as Ghana confronts the pervasive sugar problem head on.

By the A4H Coalition, 
Ghana Academy of Nutrition and Dietetics (GAND), 
Ghana NCD Alliance, and Ghana Public Health Association.