Any Liberal government worth its salt would repeal the sugar tax

As the so-called ‘sugar tax’ comes into being, it’s worth remembering just how poor a piece of policy it is. The sugar tax is regressive, it is ineffective and it is illiberal; any Liberal government worth its salt would repeal it.

The pre-amble to the constitution of the Liberal Democrats commits the party to both the fundamental value of liberty and ensuring that no-one is enslaved by poverty, the sugar tax fails on both these counts.

First and foremost the sugar tax is illiberal. If we accept that philosopher John Stuart Mill’s ‘harm principle’, the idea that power should only be exerted over an individual against their will if it is to prevent harm to others, is a cornerstone of liberal thought, then quite clearly the sugar tax fails this test. The consumption of sugary drinks poses no threat of harm to others, and as such the state has no business attempting to reduce their use. Whilst you could argue that the ‘harm’ to others associated with the consumption of sugary drinks is the additional strain this may put on the health service, if you were to follow this argument through to its logical conclusion you would advocate taxing gym memberships, as injury sustained through excessive exercise would too place a strain on the NHS. Clearly, this is nonsensical.

To add to this, not only is the sugar tax illiberal but it is also regressive, as it will disproportionally affect those on the lowest incomes. This is both because they are more likely to consume non-diet soft drinks than wealthier individuals, and also because tax rises such as this will take up a larger proportion of the poorest individual’s budgets. Evidence suggests that for individuals with a high sugar diet, taxes do little to reduce their consumption, and as such the sugar tax is all cost and no benefit to those whose disposable income is already low. Far from lifting people out of poverty, the sugar tax further condemns them to it.

In truth, the sugar tax is not even effective at what it sets out to do; evidence from Mexico suggests that since the implementation of a sugar tax there has been little to no drop in consumption of fizzy drinks whatsoever. Here in the UK, drinks companies, most notably Irn-Bru and Lucozade, have reacted to the sugar tax announcement by reformulating their recipes in order to avoid paying it, much to the disappointment of their customers. The sugar tax is not even a successful form of hypothecated taxation to fund more sport in schools, indeed all the government has achieved is to ruin the taste of some of Britain’s favourite drinks.

All in all there is very little, if anything, for a liberal to like about the sugar tax; indeed elsewhere the idea has been so unpopular that it has had to be repealed almost immediately. A Liberal government, committed to both the fundamental value of liberty and to ensuring none are enslaved by poverty, would surely do the same.

* Andy Briggs is Co-Chair of Liberal Reform, a pressure group for personal, political, social and economic liberalism.

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49 Comments

  • What’s your take on tuition fees Andy?

  • Daniel Henry 6th Apr '18 - 2:06pm

    I’ve always seen Sin Taxes as a Liberal compromise between illiberal bans and failing to do anything to tackle dangerous or unhealthy habits.

    Sin taxes allow us to continue make our own choices but pay a little extra if the choice increases health risks, which can in turn help cover the costs to the NHS.

    I’m not clear from the article whether this is an argument against sin taxes for unhealthy foods or just the way they’re being implemented.

  • Alfred Motspur 6th Apr '18 - 2:14pm

    This is very true and the article is compelling and extremely well-written.

  • Andy Briggs 6th Apr '18 - 2:18pm

    Byrnwell – My take on tuition fees is that, as they have increased opportunities for the poorest in society, the exact opposite effect of the sugar tax, they are largely worthwhile.

    Daniel – You are right of course that the sugar tax is preferable to a ban, although of course by increasing their price you run the risk of essentially banning the product for those who can’t afford it. Unforntunately the proceeds of the sugar tax do not go towards the NHS, as this is not what the money is ringfenced for, perhaps if it were the policy would be slightly more palatable.

  • @Andy Briggs

    I disagree. Completely

    Sugar consumption is directly proportional to the development of a whole host of diseases too long to list. These diseases then cost the NHS money. The NHS is funded through taxation. So it is not unreasonable that those making net unhealthy choices leading to later NHS expenditure, contribute to the NHS costs they incurred through their choices.

    I’d like to see a parity of NHS cost recovery through sugar taxation as we see with tobacco taxation. Currently the level of taxation on tobacco is felt to adequately reimburse the treasurey for the costs to the NHS from tobacco consumers and their health problems. Basically smokers are paying their way, so great, let them smoke. Ditto with sugar (the tax is likely needed to be far higher than currently proposed, given the comparable harm to health from sugar as tobacco). Then we can let people consume sugar as they like (or as they can afford)

    Am afraid your comparison with taxing gym membership is poor. In spite of risks incurred from any form of physical activity, the net effect is overall very positive for your health for the vast majority of physical activity (a few exceptions being some high risk and comparatively low exertion activities, such as down slope skiing). Sugar carries very little health benefit beyond a short lived sense of pleasure, which is easily cancelled out by the terrible damage to physical health.

    And it doesn’t matter if sugar tax doesn’t decrease consumption (as evidence from Mexico is said to demonstrate). Fact is it raises revenue to recover costs of its ill effects.

    Disclaimer: I am a classical liberal, desiring a smaller state and lower taxes. However whilst the NHS is tax funded and free at point of use, I am very favourable towards targeted taxes that tax activity that is directly proportional to ill health and thus NHS use.

  • David Quayle 6th Apr '18 - 2:32pm

    I disagree because you’re failing to take into account that illness, disease and disability also compromises freedom. It’s messy and far from ideal but it is a nudge to change behaviour rather than a ban which is always the better option

  • David Evans 6th Apr '18 - 2:47pm

    The point is we are a Liberal Democrat Party which believes in a balance between three fundamental values of liberty, equality and community. While any tax reduces the liberty of those who pay it, the value to the community of say reduced health spending and on equality by improving the health of those who no longer consume amounts detrimental to their health can outweigh the former.

    Any position based solely on a consideration of one of the factors is insufficiently thought through.

  • Tony Greaves 6th Apr '18 - 3:05pm

    A tax on sugar does not reduce the liberty of anyone, except for people who make profits from the sale and use of sugar. It increases the freedom of people who eat less sugar, to live a better and longer life.

    By the way, that’s what it ought to be – a sugar tax. I don’t understand the logic of taxing just one use of sugar (soft drinks). There should be a hefty tax on the use of sugar itself, levied at source (manufacture or import). the disincentive to use it would then feed right through the system and operate at every level.

    As for the original posting, the time is coming when this party needs to sort out where it stands in the overall political spectrum.

  • Sean Hyland 6th Apr '18 - 3:28pm

    In and of itself I have no concerns generally re a sugar tax but why is it not extended to all products with large amounts of sugar? If we are pursuing a health benefit as reason for its introduction should that not apply on a wider scale as the products that use sugar are generally choice based items. Simple solution as Tony Greaves says is a general tax on sugar. I have read somewhere an article that advocated we started with taxing Jamie Olivers own recipes.

  • What do you call sugar though Tony?

    Glucose, of course, is fundamental to all life that we know of. Honey is a significant source of unbonded glucose – and maltose and fructose are just as easily metabolised to glucose as sucrose.

    I certainly agree that it should not be targeted at one particular subset of drinks – and to be honest, since PepsiCo own Tropicana and CocaCola MinuteMaid they have plenty other ways of peddling “sugar” – more broadly understood even if their headline products were to decline in popularity as a result.

    We don’t have a National Health Service. We have a National Illness Service, and part of this must be laid at the decision not to include professional training in nutrition amongst its main practitioners. For as long as I can remember, dietary advice has been subject to lobbying and not terribly good science. They have promoted carbs over fats for decades on the basis of a single sophomoric bad research paper originally purporting to show that fat consumption correlated with worse health combined with a concerted campaign by large scale carbohydrate commodities traffickers like cereal companies, and one of the results of this is the demand for carbs, and, in the case of these drinks, for a “quick fix” carb.

    I don’t think a tax like this can counter that history, merely address a particular hysteria. This, as implemented, sends all sorts of perverse messages – that your Tropicana is somehow better for you than the Coke you’ve just taxed, or that the high sugar coffee drink peddled by competitors like Starbucks are okay. It’s bonkers to me. If it’s meant to “send a signal” (which I don’t think taxes should do anyway) presumably meaning – to people we think are too busy/ignorant/stupid to discover these issues for themselves – it sends all the wrong ones. Outsourcing responsibility for our most basic of needs – nutrition – is part of this problem.

  • John Marriott 6th Apr '18 - 3:41pm

    Like the congestion charge it is hoped that it never gets paid. If it changes habits, great! Personally I have no problems with this kind of ‘taxation’. Does that mean I’m not a Liberal, Mr Briggs? I should concentrate on that Masters if I were you!

  • @David Evans
    “”””The point is we are a Liberal Democrat Party which believes in a balance between three fundamental values of liberty, equality and community. While any tax reduces the liberty of those who pay it, the value to the community of say reduced health spending and on equality by improving the health of those who no longer consume amounts detrimental to their health can outweigh the former””””

    Am afraid this sort of reasoning, from the framework of balancing the triad “liberty, equality and community”, means just about any policy position can be justified using eloquent language and measured reference to the three points in the triad (selecting compromise of one or more for the benefit of another and maybe hypothecating eventual benefit of the original point compromised). Indeed, in my opinion, liberty is very much in competition to equality, making consistent reconciliation difficult. Hence a wobbly mess if you actually try governing from this framework. High time this aspect of the constitution was reviewed and revised.

  • adrian sanders 6th Apr '18 - 4:01pm

    The author overlooked the fact that sugar isn’t central to food, but it is central to food industry profits. Then again perhaps he didn’t.
    The World Health Organisation recommends that people should halve their consumption of sugar – to keep it below 10 per cent of daily calorie intake, with an ideal target of five per cent.
    This and endless studies showing the link between sugar and obesity often leading to Type 2 diabetes have persuaded our Government to introduce this tax.
    It will prevent the enslavement of some people from diabetes but is only a part of the measures required to significantly impact on the Type 2 pandemic.
    I write as a person with Type 1 diabetes that lifestyle did not trigger and diet cannot reverse, but have to avoid sugary foods to maintain balanced blood glucose levels – it isn’t easy, but would be a whole lot easier if the tax was on foods and all drinks. That is something a Party that valued people as much as it values profits would be campaigning for.

  • David Evans 6th Apr '18 - 4:14pm

    Ah James, I’m afraid there are competing values and a balance has to be struck, which requires intelligence, consideration and judgement. Don’t tell me you expected Liberal democracy to be easy!

  • @adrian – “I write as a person with Type 1 diabetes that lifestyle did not trigger and diet cannot reverse, but have to avoid sugary foods to maintain balanced blood glucose levels – it isn’t easy, but would be a whole lot easier if the tax was on foods and all drinks.”

    Aside from all the newer discoveries that type 2 (or rather the six new types they think make up what has been called type 2) that show it’s not necessarily a lifestyle created thing, why would it be “a whole lot easier if the tax was on foods and all drinks”? I just do not follow that logic. If you know, as someone with a metabolic condition, what you are best eating, drinking and avoiding, how is tax any benefit whatever.

    Why do you want to punish people? And what gives you the right to impose such punishment?

  • Andy Briggs 6th Apr '18 - 4:57pm

    To the various comments arguing that the sugar tax is some sort of “nudge”, I’d disagree. A nudge policy almost by definition maintains individual choice – this does no such thing. The only “choice” here was made by corporations – individuals have been left with either a tax increase or a reformulated drink, no status quo option.

  • Colin Paine 6th Apr '18 - 5:06pm

    How refreshing to read a purist liberal argument on this, makes a change from endless nanny statism and assumptions that people can’t take responsibility for their own consumer choices!

  • Ian MacFadyen 6th Apr '18 - 5:23pm

    Gladstone abolished the sugar tax, so that the poor could enjoy the same luxuries in cake and confectionery as the rich. It was an important step towards equality.

    What evidence is there that sin taxes, which is what the new sugar tax is, work in practice? People have not given up smoking or drinking because of the heavy taxes on those products. People have shown they will simply pay the higher price with each tax hike. If those taxes have not changed behaviour, what evidence is there that the sugar tax will change behaviour?

    What evidence is there that the new sugar tax will not be regressive and bear down more heavily on the poor. The Conservative government may not care much about the effects of regressive taxation on the poor, but we Liberal Democrats should.

  • Matt Severn 6th Apr '18 - 5:48pm

    Libertarian politics is the next room down the hall

  • adrian sanders 6th Apr '18 - 6:21pm

    @jock Many soft drink manufacturers have already reduced the sugar content in their products even though there were often zero sugar alternatives on the market. That is not the case with many packaged foods and I would love to be able to be occasionally liberated from the kitchen and enjoy the ready-made meals you probably take for granted. I think many commentators on here are thinking a small increase in cost won’t affect consumer behaviour while ignoring the other prize which is getting the manufacturers to use less sugar that this tax has already encouraged within the soft drinks industry.

  • I was under the impression that the sugar tax in Mexico did lead to an initial reduction of the consumption of sugary drinks, but that has reverted, possibly as people were no longer noticing the extra price, or because it was going to increase anyway. We need to wait and see in the UK, but I think it’s significant that the money raised from the tax is supposed to be ring-fenced for projects advocating healthy eating and sport in schools. There will need to be pressure to ensure that this really is extra money going into health education, rather than displacing money already allocated. If the money is spent appropriately, then we have a much better chance of seeing sustainable results.

    Perhaps it isn’t surprising that many soft drinks companies have opted to reduce the amount of sugar in their drinks instead of increasing the cost. This is already an overall positive result, and something that I predict will happen if minimum unit pricing for alcohol is introduced.

    Ultimately, sugar is not a necessity, and certainly not sugary drinks. The sugar lobby is very powerful, and have spent the last few decades trying to subvert public health advice that we should reduce our sugar consumption. I can’t remember the date, but decades ago, WHO produced recommendations that most people in the West need to reduce salt, sugar and fat intake. They successfully lobbied for the final recommendations to exclude sugar, so we all became obsessed with reducing fat and salt, and our sugar consumption continued to increase. Frankly, they have the ethics of the tobacco companies.

    I’m sure this particular implementation of the sugar tax won’t solve childhood obesity, or prevent tooth decay on its own, and it will probably need a few tweaks to ensure it works as well as possible, but overall I’m a supporter. The health of the people and having a viable NHS is more important to me than the ability for people to have very cheap access to fizzy, sugary flavoured water.

  • When Andy Briggs progresses with his Masters he might discover that J.S. Mill also wrote :

    “taxation for fiscal purposes is absolutely inevitable ; that in most countries it is necessary that a considerable part of that taxation should be indirect ; that the State, therefore, cannot help imposing penalties, which to some persons may be prohibitory, on the use of some articles of consumption. It is hence the duty of the State to consider, in the imposition of taxes, what commodities the consumers can best spare ; and a fortiori, to select in preference those of which it deems the use, beyond a very moderate quantity, to be positively injurious. Taxation, therefore, of stimulants, up to the point which produces the largest amount of revenue (supposing that the State needs all the revenue which it yields) is not only admissible, but to be approved of”.

    In my view Mill agrees with Adam Smith that “sugar, rum and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation”.

    @ Colin Paine I found it quite refreshing when the ‘Nanny State’ NHS intervened on my behalf to save my life with a transplant operation.

  • Is this a first ?

    Direct quotations from J.S. Mill and Adam Smith referred upstairs.

  • Matt Severn – well, yes. Perhaps this helps us to understand where Liberal Reform are coming from. Not often we see a concern about “no status quo option” on this site!

  • Do we have to have disclaimers that each piece of content may not be the opinion of any organisation listed in the one line intro of the author? Why should this be the opinion of Liberal reform? Perhaps it’s the opinion of the University of Southampton postgraduate politics faculty? Or, more likely, the opinion of the author themselves.

  • Andy Briggs 6th Apr '18 - 9:37pm

    Jock is, as so often, right, what I write is my opinion and not necessarily that of any organisation that follows in my bio, which is probably just as well.

  • @Ian McFadyen

    “”””Gladstone abolished the sugar tax, so that the poor could enjoy the same luxuries in cake and confectionery as the rich. It was an important step towards equality.””””

    Importantly no NHS, or indeed hardly any statutory state support for health and welfare, existed at that time. If people ate too much sugar and got diseases from it, it was their problem. If people ate too much sugar, and got too fat to be economically productive, it was their problem.

    Now, with statutory tax funded healthcare and welfare, aquiring diseases or economic inactivity is no longer solely the problem of the individual, but a problem for the state as well, which must spend taxes on remedying such issues.

    “”””What evidence is there that sin taxes, which is what the new sugar tax is, work in practice? People have not given up smoking or drinking because of the heavy taxes on those products. People have shown they will simply pay the higher price with each tax hike. If those taxes have not changed behaviour, what evidence is there that the sugar tax will change behaviour?””””

    The fact that all the econometric data shows that tax receipts raised on the sale of tobacco cover the additional expenditure required to pay for its ill effects (mostly in form of NHS costs, plus some amount of social care and incapacity benefits) means it’s working. As a liberal I personally don’t care if it is changing behaviour or not (people retain the freedom to choose what they consume, and I don’t care what they are choosing). What I care about is that the the economic externalities of such choices are being accounted and paid for – in this case in the form targeted taxation on consumption – so that it is economically sustainable.

  • Jayne mansfield 6th Apr '18 - 10:33pm

    @ Andy Briggs,
    I am sorry Andy but I find your notion that if one taxes sugar, why not gym membership positively dangerous.

    If one believes in preventative medicine one can identify that one of the issues is the lack of exercise, not too much, even when one suffers from conditions where the public seem ill -informed that exercise is beneficial.

    One can also look at those who have suffered major illnesses, and the answer, despite fears caused by ignorance, is that they overcome those fears and start to exercise.

    The sugar tax is not a panacea, but in my opinion, it is one step in the right direction for a nation that has a problem with obesity and dental caries in the young.

    Is my opinion ‘liberal’ as in Liberal Democrat, ‘Am I bovvered’.

  • @Ian McFadyen “Gladstone abolished the sugar tax, so that the poor could enjoy the same luxuries in cake and confectionery as the rich. It was an important step towards equality”. Equality ? For who ?

    Several hundred slaves were executed after the ‘Demerara Rebellion’ on the Sugar plantations owned by Gladstone’s Dad in 1823 – and after the Slavery Abolition Act 1833, Sir John Gladstone (W.E.G.’s Dad) received £106,769 (equivalent today £83m), the largest of all the compensation payments made by the Slave Compensation Commission.

    There’s an interesting article about the Gladstone sugar plantations in a research paper on the Jstor academic papers site.

    THE CONDITION OF THE SLAVES ON THE SUGAR PLANTATIONS OF SIR JOHN GLADSTONE IN THE COLONY OF DEMERARA, 1812-49
    Richard B. Sheridan, NWIG: New West Indian Guide Vol. 76, No. 3/4 (2002), pp. 243-269

    Do you reckon W.E.G. still had a vested interest when he abolished the sugar tax by any chance, Ian ?

  • I can’t help thinking that the article was only written so the author could get a headline wordplay on ‘salt’ and ‘sugar’….

  • David Hopps 7th Apr '18 - 8:36am

    I’m relieved by the majority of responses on this blog. This seems more of a libertarian right position than a position drawn from Liberal Democrat core beliefs – and arguing from the right of George Osborne is not about to free us from a 7% poll rating. We must propose ways to do good. I’m sure JS MIll would have felt he was curbing the potential harm done by others to the individual and not (unduly) curbing the freedom of the individual.

  • Stephen Booth 7th Apr '18 - 9:01am

    This line of thinking goes right back to the right to bear arms. It looks liberal at first sight but you have to look at the consequences on the uninformed, the ignorant and those too busy to interest themselves.

  • Richard Kemp 7th Apr '18 - 11:05am

    As the Lib Dem Health spokes at the LGA I have welcomed this tax. Indeed it will now collect only half the predicted level of income because of huge reductions in sugar in some products.

    Obesity costs the NHS £6.1 billion every year. It leads to 14 different types of cancer plus heart, liver, kidney and respiratory problems.

    If you are obese at 11 your muscular/skeletal system will not have formed properly causing life time health issues.

    A sugar tax by itself is not enough. We need better information on packaging of all foods. We need a campaign to inform people of the consequences of their actions.

    Obesity is today’s lung cancer which has been massively reduced over time because of measures like these. Let’s not condemn people to an early death because of our own timidity and inactivity.

    Lastly, all the evidence from Mexico is that the tax is working.

  • Perhaps this is an instance where I distance from liberal policy then. Taxing unhealthy actions is not equilavent to taxing the intention to become healthier and if companies are reducing sugar in their recipe then the tax has worked – in my opinion.

  • John Marriott 7th Apr '18 - 11:31am

    I think it was the late Alma Cogan, who sang; “Sugar in the morning, sugar in the evening, sugar at supper time”. Little did she know what she had started! It was rich Elizabethans, I seem to recall, who consumed tons of the stuff because they could afford to and lost most of their teeth in the process. Perhaps my brief historical tour doesn’t include Gladstone, Adam Smith or even John Stuart Mill, which I guess shows my lack of knowledge.

    What I think I know is the point of this kind of tax is to ‘encourage’, or ‘nudge’, if you prefer, both manufacturers and the public to reduce the amount of sugar they add to products or consume either directly or indirectly. If it doesn’t work, at least someone, even the Tories, has tried. Perhaps we could liken the current debate, both here and elsewhere in the media, with rearranging the deckchairs on a famous ocean liner, or that of a certain Roman emperor practising his instrument at an inappropriate time!

  • @David Hopps
    “”””I’m relieved by the majority of responses on this blog. This seems more of a libertarian right position than a position drawn from Liberal Democrat core beliefs””””

    Whilst I am a classical liberal (which some people disparagingly label as libertarian right), and I disagree with Andy Briggs’ whole article (who himself probably may call himself some sort of classical liberal, since that is what the Liberal Reform group is all about as far as I understand), I don’t think his article is actually rooted in the libertarian right. Whilst appealing to the concept of liberty (which is very very reasonable for any liberal to do), he also makes the more ‘social liberal’ case that the sugar tax is “regressive”, which is objectively is. Any tax on basic or commonly consumed commodities is “regressive”, because the poorest in society will pay proportionally more of their income on these taxes than richer people.

    An example. A standard packet of cigarettes has just under £7 of tax within the overall cost. So a person smoking a packet a day pays £2555 in tax per year. A person earning net £100,000 pounds per year smoking a packet of cigarettes a day, will therefore pay 2.55% of their net income on cigarette tax. A person earning net £10,000 per year smoking a packet of cigarettes a day, will pay 25.5% of their net income on cigarette tax. Hence why cigarette tax (and VAT, alcohol tax, and to a much lesser practical extent fuel tax) is a “regressive” tax, where the poor pay proportionally more of their income than the rich. Banded income tax is “progressive”, because the rich pay proportionally more than the poor (as long as they are not avoiding and evading tax, which many successfully do). Still, in spite of it’s regressiveness, I support the sugar tax, probably because I am not a a social liberal, not even close.

  • Peter Martin 8th Apr '18 - 7:30am

    Logically, if a tax on high sugar products is illiberal, it follows that a tax on high alcohol drinks is illiberal too.

    The main reason for taxation is to create a demand for the currency and thereby give it a value. But there are others. In a democratic society we can define legitimate other reasons too.

  • Nonconformistradical 8th Apr '18 - 10:58am

    @Martin
    “Years ago it was much more common to add copious sugar to tea and coffee, there was also obesity, but how direct was the linkage? Sugar can become a significant proportion of the energy intake, this can be the result of drinks but also sweets and other things.”

    But years ago many of us were rather more active than we may be now and used up more calories….

  • Peter Martin 8th Apr '18 - 11:56am

    @ Martin,

    Of course you can argue that sugar isn’t as bad as tobacco and alcohol. We all convert starches to sugars in our digestive system using a variety of enzymes such as amylase, which is present in our saliva. So we can say sugars (sucrose, glucose etc) are just naturally occurring foodstuffs. That’s a valid argument. Then it becomes a matter of opinion where we draw the line on such matters. But in principle there’s no real difference between sugar and alcohol. TBH I don’t have strong views either way.

    You might think my views on economics are “oddball”. I may be wrong, but my view is that Govt spends money into existence in the first place then gets some of it back in taxes later. Some people, maybe even yourself, might imagine that it’s created by God who has made just so much of the stuff and left strict instructions that we should never create any more.

    As a scientist I’m open to a rational argument on the various possibilities!

  • Bill le Breton 8th Apr '18 - 12:13pm

    @Martin, just a thought on @Peter Martin’s “Oddball economics” as you call it, or, as others call it, the Sectoral Financial Balances Approach which for instance Martin Wolf describes here https://www.concertedaction.com/2012/07/19/martin-wolf-on-wynne-godleys-sectoral-financial-balances-approach/ :

    “… I look at this through the lens of “sectoral financial balances”, an analytical framework learned from the work of the late Wynne Godley. The essential idea is that since income has to equal expenditure for the economy, as a whole, (which is the same things as saying that saving equals investment) so the sums of the difference between income and expenditures of each of the sectors of the economy must also be zero. These differences can also be described as “financial balances”. Thus, if a sector is spending less than its income it must be accumulating (net) claims on other sectors.

    “The crucial point is that, since sectoral balances must sum to zero, a rise in the deficit of one sector must be matched by an offsetting change in the others. It follows that if the fiscal deficit is increasing, the sum of the surpluses of the other sectors of the economy must be increasing in a precisely offsetting manner.”

    An approach that forewarned of the dot com crash and the Great Financial Crisis and one that is not hastily dismissed by economists.

  • Richard Howard 8th Apr '18 - 8:49pm

    It is clear that obesity generates a huge strain on health services and Andy’s ‘argument’ about taxing gyms is utterly ridiculous. Not only does the health benefits of regular exercise massively outweigh any strain on the NHS from injuries, it also falls foul of the ‘reductio ad absurdum’ fallacy so beloved by academics, but so irrelevant and irritating to those of us who live in real world. Policies should not be “followed to their logical conclusion” but judged purely on their own merits.

    The merits of this policy are significant and the erosion of liberty caused completely negligible. Much of the benefit has already been realised before a single penny of tax has been paid by anyone, rich or poor. By reformulating their recipes to avoid the sugar tax, the soft drink manufacturers have already achieved the aim of drastically reducing sugar intake of many people. This benefits both them and the rest of society in terms of reduced strain on the health service. Yes, their liberty to enjoy the former recipe in all its sugary glory has been impinged. However, this again is insignificant when compared to the liberty impinged by those who are enslaved by their own obesity – a liberty angle that the author fails to address at all.

    I would be more happy to entertain this academic thought experiment if it were backed by any kind of evidence. However, contrary to what the article claims, it appears that the Mexican sugar tax is actually having a considerable and beneficial effect.

  • Peter Martin 9th Apr '18 - 7:13am

    The other big problem in our diets is the amount of fat we eat. The clever scientists of the food industry know how to disguise fat in processed foods.

    Then we told that high fat foods are low in sugar!

  • @Richard Howard
    “”””Yes, their liberty to enjoy the former recipe in all its sugary glory has been impinged. However, this again is insignificant when compared to the liberty impinged by those who are enslaved by their own obesity – a liberty angle that the author fails to address at all.””””

    I agreed with your comment up until this point.

    If you are concerned about people’s liberty being impinged by those “enslaved” by their own obesity, then the sugar tax will leave almost as many people “enslaved”. Ready access to highly refined carbohydrates (with or without taxation) will mean there will always be millions “enslaved” by obesity here. To truly “liberate” those from obesity, ready availability of highly processed carbohydrates need to be banned, as well the ready availability of cheap food in general. As a liberal, I wouldn’t support such a ban. I accept liberalism gives people choice, including the ability to make bad choices.

    In spite of punitive taxes on tobacco and alcohol, still millions of people are “enslaved” by COPD (formerly emphysema/chronic bronchitis), lung cancer, head and neck cancer, liver cirrhosis and alcoholism.

    I support the sugar tax (and believe it need to be set far far higher), because it makes those choosing unhealthy lifestyles, thus choosing to burden the tax funded NHS, pay for such burden. I don’t care for changing people’s choices, when the choice only affects themselves. By making sugar eaters (or smokers) pay for the financial externalities they put on the NHS, it means the burdens created by their choice is now self-financing and only affect themselves. QED

  • Nick Stuart 12th Apr '18 - 1:00pm

    Well written and interesting article. However it is a flawed argument based on an ideological approach rather than the direct good of the population. Given the direct and indirect effects of the obesity epidemic and the pernicious advertising of sugar the tax is a sensible way forward. reducing health effects in individuals and costs to the NHS. Reformulation reducing the sugar levels shows that it works and if drinks don’t have a large tax upon them the regressive tax argument falls apart.

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Recent Comments

  • User AvatarAntony Watts 25th Aug - 11:42pm
    Continental High Speed lines are a glue that holds the social cohesion of the Eu together. The issue is that the isolated UK does not...
  • User Avatarsiv white 25th Aug - 10:45pm
    THEAKES, You are overestimating how much people think or know about politics. It is quite simple, people either think Brexit is stupid or wonderful and...
  • User Avatarfrankie 25th Aug - 10:19pm
    There is a desire to get things finished with, let us return to nice times they squeal and many will sign up to that. A...
  • User AvatarKatharine Pindar 25th Aug - 10:12pm
    David Warren and Michael BG. I agree that the outcome of this working group has been rather disappointing, and it is strange in my opinion...
  • User Avatarfrankie 25th Aug - 10:07pm
    I expect Depeffle hope's the following scenario works out. 1. Parliament blocks him 2. He appeals to the people and gains a majority 3. He...
  • User AvatarJames Pugh 25th Aug - 9:01pm
    Thank you Miranda for your 2 very patient and to-the-point replies in the comments section. I'm always heartened to see party officials positively and effectively...