Treasury argues against a fat tax

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Treasury officials believe that a sugar tax or a tax on soft drinks would hit lower income Maori and Pacific Islanders too hard even though they are the groups most likely to be obese and at the heart of the country’s obesity blowout.

A Treasury working paper prepared in February this year, after the Government announced its anti-obesity strategy,  concluded that low-income consumers spend a higher proportion of their income on the targeted food groups and so would bear a relatively higher burden of the tax.

And it was quite specific who those low-income consumers are.

The paper says 66% of Pacific and 47% of Maori adults are obese, compared to 12% of Asian and 29% of European New Zealanders .

“Obesity is also positively correlated with socioeconomic deprivation being 72% higher among lower

 socio-economic groups," it says. 

It says the two primary causes of unhealthy weight gain are an excessive nutrient intake through  consumption of fatty and sugary food and drink combined with a lack of exercise. 

“A “sugar tax” attempts to combat the former of these two causes.

“By increasing the price of unhealthy food, a sugar tax disincentivises its consumption and encourages replacement with healthier substitutes. “

Treasury’s interest in the topic comes from the amount of money being spent on health services for obese people. 

It says a Ministry of Health study has estimated the cost of obesity-related illnesses amounted to $624 million or 4.4% of New Zealand’s healthcare expenditure, with $247 million attributed to type 2 diabetes in 2009.New Zealand has the third-highest rate of obesity in the OECD; 31% of New Zealand adults are obese, and an additional 35% are overweight..

It quotes the Ministry of Health as saying obesity rates have risen 20% in the last 30 years.

However, the linkage between sugary soft drinks and the obesity rate is not necessarily that strong.  

The paper says non-alcoholic beverages make up only  5% of total calories consumed by the average New Zealander, and is only the fifth-highest contributor to total energy intake. 

But soft drinks do account for a significant amount of sugar consumed,option. 

However, soft drinks constitute 17% of all sugar consumption, and non-alcoholic beverages are the second highest contributor to total sugar intake, higher than sweets but below fruit.

But the consumption of sugary soft drinks was concentrated among certain ethnic and socio-economic  groups --- significantly higher for Maori and Pasifika individuals (22.3% and 22.4% respectively) compared to those of the New Zealand European ethnic group (16.1%), and especially high among Maori and Pasifika teenagers (33.6% and 32.1%, respectively).

The paper has a large amount of data redacted but concludes that there is ample evidence that a sugar tax would be regressive; that it would disporppiritonately impact on poorer Maori and Pacific Island households. 

The Government has consistently rejected such a tax and last year launched an obesity strategy which relies on counselling and health campaigns to encourage school pupils to eat healthier and to exercise more. 

The Greens are the only party to formally support a sugar tax. Labour would instead try and get manufacturers to use less sugar in their products.

This paper is unlikely to encourage any political support for such a tax.

 

 

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