Soft drinks, hard decisions: What Canada is doing amid the global sugar tax debate
As childhood obesity rates rise, the country is being drawn into the mix on the issue. Proponents say a tax is necessary to curb consumption while opponents argue that it will hit low-income families the hardest and lead to job losses. Where does the government draw the line?
When George Osborne stood up in the British House of Commons last year and announced that his Conservative government was introducing a tax on sugar-sweetened beverages, he did so against all political advice.
It was a decidedly un-conservative fiscal move that had members of his own party describing the levy as "nanny-statism at its worst." Mr. Osborne, at the time Chancellor of the Exchequer, was also concerned his government would be vulnerable to accusations of being out of touch with ordinary people who either have limited access to healthier choices, or cannot afford them.
But with the support of then-prime minister David Cameron, he went ahead with the tax anyhow.
"The way I put it when I announced it in the budget, was how I felt about it," Mr. Osborne told The Globe and Mail this week. "I don't want to look back on my time doing this job, knowing there was a problem with the health issues that sugar causes and then say to my children, 'I did nothing.'"
The battle over the merits of a sugar-sweetened beverage tax, in all its various forms, is international, emotional and pricey. It is being waged over the airwaves, on the streets, at ballot boxes, in courthouses and in political offices.
Canada is immune neither to the debate, nor to the serious and costly health problems that proponents say underscore the need for a fiscal incentive to curb sugar consumption. Just this week, the World Health Organization and Imperial College London released a massive study calling out Canada and five other high-income, English-speaking countries as trailing only Polynesia and Micronesia in terms of obesity rates.
Those in favour of a tax – the list includes the WHO, the Heart and Stroke Foundation, and Diabetes Canada – argue the levy will save lives and reduce health-care costs while at the same time raise billions for health-related initiatives. They point to the results Britain is already seeing; even before the tax comes into effect next year, manufacturers have started altering their recipes to reduce sugars and, in turn, reduce the taxes they will pay. Advocates also say that sugary drinks are a prime target because they can be guzzled quickly and carry little, if any, health benefits. And while the tax may prove regressive, it is lower-income, isolated people who experience some of the highest rates of obesity and chronic disease.
Opponents note that soft-drink consumption in Canada has already declined significantly in recent years. They also say soda taxes do not correlate with declines in rates of obesity or chronic illness. Instead, they hit low-income families the hardest and lead to job losses. And what about milkshakes or fruit juice? Where does the government draw the line?
The response in Ottawa
Canada drew headlines on the sugar issue in 2014, when the former Conservative federal government announced the country's first guideline on daily sugar consumption. The move was met with derision from health experts who deemed the 100-gram recommendation much too high, and said that it was misleading because it did not distinguish between natural and added sugars.
When the Liberals took office under Prime Minister Justin Trudeau the following year, there was a sense of optimism that more would be done – particularly since Mr. Trudeau flagged the issue of added sugars in mandate letters to his first health minister, Jane Philpott, and her successor, Ginette Petitpas Taylor.
So far, the government has announced changes to food and beverage labels, including a nutritional fact-table requirement that will tell Canadians how big a dent a particular product will put in their recommended 100-gram allotment. Sugar-based ingredients, such as honey and syrups, will be grouped together under the generic term "sugars" in the ingredients list.
The government has also held public consultations on new regulatory measures to restrict the marketing of unhealthy food and beverages to children, as well as on a revision to Canada's Food Guide and front-of-package nutrition labelling.
Still, halfway into a four-year term, the Liberals are facing pressure to do more to curb sugar consumption, especially by children, and especially when it comes to beverages.
"We had been holding our breath," said Ottawa-based obesity researcher Dr. Yoni Freedhoff. "The hope had been that with the change in power, there would be a change in action. There has been some [action], don't get me wrong … but I think they could be doing a heck of a lot more."
Dr. Freedhoff said it is time for Canada to move forward with a tax, one that earmarks revenues for health care and includes fruit juice, which he described as "liquid sugar" infused with a few vitamins that give parents the illusion it is a healthy choice.
But to the president of the Canadian Beverage Association, which represents 60,000 industry workers, a sugary-drink tax in this country would be nonsensical. "Demonizing one small segment of Canadian diets is not going to move the needle on obesity," Jim Goetz said. "Canada is a different market … . Almost 50 per cent of the products on shelves are either no- or low-calorie beverages, which is different than other jurisdictions."
Still, Finance Minister Bill Morneau's office requested an internal analysis that weighed the pros and cons of a sugar-sweetened beverage tax in early 2016. The partly redacted memo, which was obtained by The Canadian Press, noted that "a number of health organizations" had urged the government to implement a tax. Nearly two years later, the government said it would neither speculate on possible policy actions, nor discuss what might be under consideration.
In an e-mail, a spokeswoman for Mr. Morneau noted the issue of a soda tax was raised by both sides during the previous two pre-budget consultation periods. "We encourage anyone with a point of view to engage with us," Chloé Luciani-Girouard said. "It's an important topic with many facets, and we expect it will come up again as we hear from people ahead of the next year's budget."
The science of sugar
Although Mr. Osborne's 2016 budget announcement was deemed by local media as "sensational," Britain was only the latest country to wade into the soda tax fray.
France imposed a tax on beverages with added sugar and artificial sweeteners in 2012. Mexico enacted a tax on sugary drinks in 2014. Several California cities, including San Francisco and Oakland, approved sugary-beverage taxes last year. This week, Ireland laid out the details of its own tax – 20 or 30 cents a litre on non-alcoholic water-based or juice-based drinks, depending on the level of added-sugar content (pure fruit juice and dairy products will be exempt).
But just as taxes on sugary drinks are being rolled out as part of an arsenal to combat obesity and chronic disease, so, too, are they being thwarted and repealed. Denmark axed its in 2013, eight decades after it came into effect. In Santa Fe, N.M., voters turned out in droves in May to reject a tax on sugary drinks. And earlier this week, lawmakers in Cook County, Ill., which includes Chicago, voted to repeal a soda levy just two months after it was imposed.
To Dr. Robert Lustig, a pediatric endocrinologist who teaches at the University of California, "it's all about the science" of sugar. Dr. Lustig and Dr. Freedhoff testified alongside other doctors, health groups, researchers, Indigenous leaders and industry stakeholders before a Senate committee that last year called on Ottawa to consider a tax on sugar-sweetened and artificially sweetened beverages.
Foods high in added sugars, Dr. Lustig said in an interview, are metabolized differently than those that are naturally sweet. An apple has fibre, which creates a type of gel that effectively blocks a certain amount of sugar from being absorbed by the body and instead causes it to be devoured by bacteria in the intestine. The fructose in sugary soda can only be metabolized by the liver, and is then converted into fat. That fat either remains in the liver, potentially leading to fatty liver disease, or is exported as a triglyceride, possibly leading to cardiovascular disease and obesity.
Deemed by the Financial Times "the godfather of the sugar tax" and "the man who started the war on fizzy drinks," Dr. Lustig believes a smart plan would place a levy on sugary beverages, including juice, and would use the revenues to subsidize water. "The beverage companies make the water," said Dr. Lustig, author of the new book The Hacking of the American Mind: The Science Behind the Corporate Takeover of Our Bodies and Brains. "They'll be incentivized to sell the right thing instead of the wrong thing."
Mr. Osborne said he opted not to include juice and sugary dairy drinks in Britain's plan because he "didn't want to take on too many fights." Focusing his target was among several tactics that he believes helped bring the levy over the line: It was a surprise announcement, closing the door to a substantial industry-led campaign; because it is the companies who will be directly taxed – not the consumer – industry players are free to reduce the sugar content in their drinks; and he allotted the revenue to a combination of school sports and breakfast programs.
Mr. Osborne said that when he stood up in British Parliament to present the tax, he did so with "quite a lot of trepidation "that it would blow up in his face. It was, in the end, a kind of gut call that it was the right thing to do," he said.
"What are you doing with your time in office? … I look back on that as one of the things I'm really proud of having done."