International Health Policy Program -Thailand Suladda Pongutta November 2, 2009 Why should we tax sugar-sweetened beverages?

International Health Policy Program -Thailand Outline 2 Why Sugar-sweetened beverages (SSB) should be tax? Tax levy Proposed tax policies and projected effects Objections, industry reaction and public support Conclusions

International Health Policy Program -Thailand Why Sugar-sweetened beverages should be tax?

International Health Policy Program -Thailand 4 Consumption Trends USA Thailand

International Health Policy Program -Thailand 5 Obesity; consumers yield energy with poor satiating properties. Type 2 diabetes; - ruin pancreatic islet cells - causing insulin resistance Cardiovascular diseases; - increase triglyceride level - increase blood pressure - lower high-density lipoprotein level Health Outcomes

International Health Policy Program -Thailand 6 Economic problem Market Failures The phenomenon of less-than-optimal production and consumption caused by poor decision-making process. is often used as a justification for government intervention. Market failures of sugar-sweetened beverages 1. Health consequences are not perceived & concerned + Health education lose to marketing campaigns. 2. Lack of individual’s awareness of long term harms. 3. There are externalities that consumers do not realize e.g. cost resulted from obesity and chronic diseases

International Health Policy Program -Thailand Tax levy & Proposed tax policies & Projected effects

International Health Policy Program -Thailand Tax levy 8 LevyAdvantageDisadvantage 1.Specific excise tax o levied on units o should keep pace with inflation o more effect on consumption o more stable revenues (less dependent on industry pricing) - 2.Ad valorem excise tax o % of price o there should be incentives to reduce sugar/ounce. o automatically index the inflation o encourage the purchase of lower- priced brands or large containers o prices exclude tax (lower price before taxing might urge more purchase) o fountain drinks are untaxed Effectiveness depends on type of tax and tax rate

International Health Policy Program -Thailand Proposed Tax Policies and Projected Effects 9 OptionsProjected effectives 1.1 Cent/ounce of caloric sweetener (= 2.4x of current rate) 1.The cost of a 20-oz SSB increases by 15 to 20% 2.Consumptions of SSB decrease %. (elasticity; -0.8 to 1.0%) 3.Calories derived from SSB decrease 10% or 20 kcal/person/day 4.At the first year, tax would raise $14.9 billion 1.Tax beverages containing caloric sweeteners or calories exceed a threshold (1 g of sugar/ounce or calories/ounce) 1.The consumption below the threshold provides 174 fewer calories/person/day 2.Promote calorie reductions 3.Encourage manufacturers to reformulate products More suitable for specific excise tax

International Health Policy Program -Thailand Objections & Industry reaction & Public support

International Health Policy Program -Thailand Objections 1.Taxing sugar-sweetened beverages would be regressive Argument for the objection  The burden to the poor and youth (price and effects to health)  Decrease consumption among the poor and youth due to their sensitive to price changes  Prevent brand loyalties since young age  Soft drinks are not necessary for survival  Revenues for programs promoting health 11

International Health Policy Program -Thailand Objections 2. Taxing soft drinks will not solve the obesity crisis and is blunt instrument that affects even those who consume small amounts of such beverages. Arguments for the objection  The important is to implement multi-intervention. Reducing 1-2% would have mark impact on health.  Decrease financial burden. 12

International Health Policy Program -Thailand Industry reaction PepsiCo threatened to move its corporate headquarters. Tobacco industry created front groups with names that suggested community involvement. Beverage industry created “Americans Against Food Taxes”. 13

International Health Policy Program -Thailand Public Support Rose continually from 33% in 2001 to 54% in Support was highest when the revenue was earmarked for programs promoting childhood nutrition or obesity prevention. 14

International Health Policy Program -Thailand Conclusions Tax and price control should be implemented along with other interventions regarding to achieve the goal. - to decrease the consumption of SSB - to be the source of fund supporting health promotion program The great challenges of SSB taxing - SSB itself is non toxic. - Tax SSB alone has little or no effect on improving health. - Where is the most appropriate point of taxing?

International Health Policy Program -Thailand Thank You 16