Shifting Strategies of Sugar Taxation

The history of sugar can be told through its impact on world diets. It can also be told through its impact on world economies, as seen in Sidney W. Mintz’s sweeping study Sweetness and Power.[i]

For some 500 years, one of the powers derived from the demand for sugar has been the power of taxation.[ii] As Adam Smith argued in The Wealth of Nations in 1776, sugar, rum and tobacco were “extremely proper subjects of taxation”: they were “nowhere necessaries of life” and had become “objects of almost universal consumption.”[iii] Sugar could be described in the same terms today in much of the world, yet the ways in which the power of taxation is exercised is now on the verge of a dramatic change—after centuries of promoting the sugar industry through tax policies, some governments are attempting to use taxation alongside other policies to reduce sugar consumption and change societal perceptions of the commodity.

The vast quantities of sugar traded in the global market by the 18th century made sugar taxation a potent source of both revenue and political power. Governments used duties and excise taxes to protect colonial sugar interests and raise revenues.[iv] These sugar taxes were of a scale to fund wars—for example, British sugar duties were raised in 1781 in the midst of the American Revolution and no less than seven times during Britain’s wars with France in the late 1700s and early 1800s.[v]

But these taxation policies also had unintended consequences for sugar consumption. As Mintz notes, British sugar duties established to protect West Indian planters taxed British consumers regressively in the early 19th century and “hence kept sugar consumption substantially lower among the poorer classes than it was even among the sailors and paupers who were its official charges.”[vi] That this was not by design is clear from the government’s willingness to offer sailors and paupers as customers to the sugar trade and it is clear in the 1820s debates over reducing the sugar duties.[vii]

Today, sugar remains one of the world’s most protected agricultural products, second only to rice, and as sugar consumption continues to rise, so do the potential tax revenues.[viii] But in the past two decades, a new motivation for taxing sugar has emerged: encouraging healthy behavior. The movement can be traced to 1994, when a Yale University professor proposed taxing unhealthy foods regressively in an intentional effort to influence food purchases, especially among lower income communities where unhealthy consumption was most prevalent.[ix] Sugar—once considered a medicine and now viewed as a cause of diet-related diseases such as obesity and diabetes—[x]quickly became a focus of such legislative efforts to introduce excise taxes at the city, state and federal level.[xi]

800px-New_York_City_soft_drink_size_limit_protest_sign     pr036-10-image1
Two competing images from New York City’s battle over sugar taxation
and other government policies designed to reduce sugar consumption.
[xv]

In each jurisdiction where such taxes have been proposed, the battle between public health advocates and the sugar lobby has been fierce—with both sides claiming to represent the interest of the lower income groups, which suffer higher rates of diet-related disease and are most heavily burdened by a regressive tax—but those advocating for a tax designed to reduce sugar consumption were successful in Mexico. Since 2014, beverages with added sugars have been taxed at one peso per liter.[xii] The expected annual tax revenue is $900 million pesos, earmarked for public health measures, and a 10 percent drop in sugar-sweetened beverage sales was seen immediately.[xiii]


This video was produced by public health advocates supporting the Mexican governments proposed tax on sugar-sweetened beverages. Mexico’s major networks, which often feature ads for sugar-sweetened beverages, would not air it.[xvi]

Where this shift in taxation policy is taking place, governments are aspiring to write a new chapter in the history of sugar, but Mintz’s central premise holds true: sugar production and consumption remains a source of power, linked to the “economic, social and political destiny of the nation itself.”[xiv]

[i] Sydney W. Mintz, Sweetness and Power (New York: Penguin Books, 1985).
[ii] Stephen Dowell, A History of Taxation and Taxes in England (London: Longmans Green and Co., 1888), 18-19.
[iii] Adam Smith, An Inquiry Into the Nature and Cause of the Wealth of Nations, (University Park: Pennsylvania State University Press, 2006), 775.
[iv] Dowell, A History of Taxation and Taxes in England, 19; and Leone Levi, History of British Commerce (London: Murray, 1872), 253.
[v] Dowell, A History of Taxation, 22-23.
[vi] Mintz, Sweetness and Power, 175.
[vii] Dowell, A History of Taxation, 23.
[viii] Average sugar intake more than quadrupled in the 20th century, Richardson notes. Ben Richardson, Sugar (Polity Press: Cambridge, UK, 2015), 2-4.
[ix] Marion Nestle, Soda Politics (Oxford: Oxford University Press, 2015), 363.
[x] Mintz, Sweetness and Power, 96-108; and Richardson, Sugar, 46-54.
[xi] Nestle, Soda Politics, 364-368.
[xii] Nestle, Soda Politics, 373.
[xiii] Nestle, Soda Politics, 373 and 377.
[xiv] Mintz, Sweetness and Power, 151.
[xv] Eyes of New York, New York City Soft Drink Size Limit Protest Sign, Wikimedia Commons. Accessed March 10, 2016, https://commons.wikimedia.org/wiki/File:New_York_City_soft_drink_size_limit_protest_sign.jpg; and Your Kid Just Ate 26 Packs of Sugar. NYC Health. Accessed March 10, 2016. http://www.nyc.gov/html/doh/html/pr2010/pr036-10.shtml.
[xvi] Tina Rosenberg, “How One of the Most Obese Countries on Earth Took on the Soda Giants,” The Guardian, November 3, 2015; and National Health Alliance, “For a Healthier Mexico – Campaign for a Soda Tax in Mexico,” Accessed March 10, 2016, https://www.youtube.com/watch?v=Yw5S9LhVeDA.

Bibliography

Dowell, Stephen. A History of Taxation and Taxes in England. London: Longmans Green and Co., 1888.

Eyes of New York. New York City Soft Drink Size Limit Protest Sign. Wikimedia Commons. Accessed March 10, 2016. https://commons.wikimedia.org/wiki/File:New_York_City_soft_drink_size_limit_protest_sign.jpg.

Levi, Leone. History of British Commerce. London: Murray, 1872.

Mintz, Sydney W. Sweetness and Power. New York: Penguin Books, 1985.

Nestle, Marion. Soda Politics. Oxford: Oxford University Press, 2015.

National Health Alliance. “For a Healthier Mexico – Campaign for a Soda Tax in Mexico.” Accessed March 10, 2016. https://www.youtube.com/watch?v=Yw5S9LhVeDA.

Richardson, Ben. Sugar. Polity Press: Cambridge, UK, 2015.

Rosenberg, Tina. “How One of the Most Obese Countries on Earth Took on the Soda Giants.” The Guardian. November 3, 2015.

Smith, Adam. An Inquiry Into the Nature and Cause of the Wealth of Nations. University Park: Pennsylvania State University Press, 2006.

Your Kid Just Ate 26 Packs of Sugar. NYC Health. Accessed March 10, 2016. http://www.nyc.gov/html/doh/html/pr2010/pr036-10.shtml.

 

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