The AMA has proposed a 20% tax on sugary drinks that it says will prevent thousands of cases of diabetes and obesity-related disease.
Announcing the policy last week, AMA President Dr Omar Khorshid said the tax, targeting sweetened sugary beverages (SSBs) with little or no nutritional value, would not only save lives but could also raise significant funds for preventative health measures.
“It could save lives and save millions of dollars in healthcare costs,” he said.
“It would also generate revenue – we estimate about $814 million annually – which we believe could be spent on other preventative activities.”
The initiative is a key plank in the AMA’s plan to tackle chronic disease and make Australia the healthiest country in the world, by raising the retail price of SSBs by 20% on average, Dr Khorshid said in a televised address at the National Press Club.
“These are drinks you don’t need in your diet,” he said.
According to the AMA’s report, A tax on sugar-sweetened beverages: Modelled impacts on sugar consumption and government revenue, 45 other jurisdictions around the world including the UK have introduced taxes on SSBs with proven gains in health outcomes and disease prevention.
If Australia follows suit, “this could, over a 25-year period, result in 16,000 fewer cases of type 2 diabetes, 4,400 fewer cases of heart disease and 1,100 fewer cases of stroke,” the report says.
In the short term, if nothing is done to stem the obesity crisis, by 2025 Australian taxpayers will have paid a further $29.5 billion (over four years) for the direct healthcare costs of obesity, it says.
The report says the tax would target a subset of SSBs; i.e., non-alcoholic drinks containing free sugars excluding 100% fruit juice, milk-based and cordial drinks.
The AMA envisages a specific excise tax based on sugar content, set at $0.40 per 100g of sugar, in line with the WHO’s recommendation that a retail price hike of at least 20% would be needed to have a meaningful effect.
This would raise the retail price of the average supermarket SSB by 20%; the tax on a 375ml can of Coke with 40g sugar (sugar content is 10.6g/100ml) would be $0.16, the report says.
“Original modelling by the AMA indicates a tax on select SSBs would reduce sugar consumption from soft drinks by 12 to 18% (27,596 to 43,804 tonnes of sugar) and raise annual government revenue of $749 million to $814 million,” it says.
The tax would give consumers a price signal that the product is unhealthy; create a disincentive in the form of higher prices; and incentivise manufacturers to lower the sugar content of their products, it says.
However federal minister for health Greg Hunt has previously ruled out introducing a sugar tax, stating that the government would never support the use of taxes as a tool to deter consumption of unhealthy foods.
“We don’t think that driving up the price of household goods for families is the way of achieving this particular outcome,” he said in January.
Addressing the Press Club, Dr Khorshid acknowledged that past calls for a sugar tax have made little headway with political leaders, but he said now was time for action.
“Too often for policy makers, the short-term nature of our budget cycles (and) the long-term pay-off of prevention … come into conflict. It’s hard for governments to make these long-term decisions,” he said.
“It’s for this reason the AMA is going to campaign on a very clear and concrete policy: a tax on sugary drinks.”