Weighed Up: The Pros and Cons of a Sugar Tax in Australia

We drink a lot of sugary drinks, and we face the associated increases in the rates of obesity and chronic diseases. Is the sugar tax an effective way to improve our diet and health?

The sugar tax has already been implemented in 43 other countries - let's take a look at the expected costs and benefits for Australians.

Sugar cubes

What is a sugar tax?

A sugar tax is a tax added to sugar-sweetened beverages (SSB). 

The World Health Organisation (WHO), Australian Medical Association, and public health advocates have emphasised the need for pricing strategies, such as an SSB, to reduce the consumption of sugar to reduce obesity and associated diseases. 

The average Australian consumes more than 2.5 times the recommended sugar consumption per day, and one-in-six teens consume more than 5kg of sugar per year from sugary drinks. 

The tax on sugary drinks would include all drinks with added sugar, including soft drinks, energy drinks, sports drinks, and cordials.

Revenue from the sugar tax can be directed to support health initiatives. This could fund, for example, subsidies for healthier foods, health campaigns to educate children about healthy eating, and programs to reduce the rates of chronic diseases.

Chronic disease type 2 diabetes

What’s the point of the sugar tax?

There has been an alarming increase of 9% in the number of overweight or obese Australians over the past 3 years, as shown by the 2018 National Health Survey. Now, more than two-thirds of Australians, and one-quarter of children (5-17 years) are overweight or obese. 

For an individual, this means an increased risk of diseases including cardiovascular diseases, Type 2 diabetes, and other diseases. For our economy, these higher rates of disease present an increased burden and cost for healthcare, and lost productivity. 

The sugar tax is designed to decrease sugar consumption and the risk of associated diseases, and generate revenue that will fund health initiatives.

Sugary drink tax

Why tax sugary drinks?

It’s simpler to calculate tax on drinks with added sugar, than food with added sugar. 

The most popular form of tax structure is a specific excise tax, which is based on the volume or amount of sugar in a particular product. The quantity of sugar in food can be inconsistent and difficult to measure, whereas these figures are standardised by drink manufacturers. 

In addition, sugar-sweetened beverages (SSBs) have zero nutritional value. Our diet is too often energy-dense and nutrient-poor, and the added sugar in SSBs offer only excess energy, encourage sugar addition, and contribute to oral disease and tooth decay. 

On the other hand,  many foods contain a mix of nutrients. If a sugar tax were added to food, this would reduce the consumption of macro- and micro-nutrients alongside sugar. Hence, SSBs make an easy and straightforward target for a sugar tax.

Soft drink cans

Does it work?

From research into cases across the world, we know that a levy on sugar-sweetened beverages can be influential in reducing consumption and improving the population’s weight and health outcomes.

It’s already been implemented in 43 countries across the globe, including the United Kingdom, France and parts of the US.

Studies in Mexico implemented a 10% tax on sugary drinks in 2014, that resulted in an average 7.6% reduction in sales over the following two years. After a sugar tax was introduced in Hungary, manufacturers reformulated their products, and consumption was reduced by 25-35%. 

A modeling study predicts that a 20% health levy could reduce the consumption of sugary drinks by 12.6%, and reduce obesity in women by 2.7% in men and 1.2% in women. This estimate could save 1,606 lives, prevent 4,400 heart attacks and 1,100 strokes, and save our healthcare system $609 million.

Doctor injecting girl

How much will it cost you?

In 2019, the Obesity Policy Coalition submitted the following recommendations to the Australian Treasury: 

  1. Fund the development and implementation of a National Obesity Prevention Strategy
  2. Increase spending on preventative health
  3. Introduce a health levy on sugary drinks to increase the retail price by at least 20%

Based on the 2017 study by Deakin University, a 20% tax on the sales of sugar-sweetened beverages would equate to average increased spending of $30 per person, per year. This breaks down to 60 cents each week. 

An earlier 2016 study by the Grattan Institute recommended a 40% sugar tax, which consequentially equates to slightly higher costs. 

Glass of soft drink - sugar tax

What are the downsides?

  1. The increased cost.

The increased cost of $30 per year will have a minuscule financial impact on middle- or high-income Australians.

The same 20% tax on sugar-sweetened beverages will cost the lowest socioeconomic group $5 more, in comparison to the wealthiest group. However, as they are greater consumers of sugary drinks and more price-sensitive, the lowest socioeconomic groups would reduce their purchase and consumption of these drinks. 

Nonetheless, these groups would benefit most from the health benefits and healthcare savings. These gains are expected to be seen for people across Australia.

Advocacy groups have suggested that the government could use the additional tax revenue to fund initiatives that counteract increased expenses.

Surgeons in operation room

  1. The demonisation of sugar.

In our modern society, we consume an excess of sugar, in the form of hidden added sugars and artificial sugars. However, we must remain aware that sugar is essential to human functioning, especially for our brain which relies on the sugar, glucose. It is only the oversupply of sugars in our modern diet that has resulted in negative health impacts.

  1. Decreased profit for beverage companies

Multinational beverage cooperations make a lot of money, anyway. The sugar-tax, by design, will result in fewer sales for these companies. Ultimately, they’re smart and will adapt to the market. 

Moreover, the sugar tax will encourage companies to reformulate their products to lower sugar levels, or create healthier alternatives. If you switch to bottled-water, these brands are likely owned by the same companies. What’s best? Save money and reduce your plastic footprint by refilling your own water bottle!

Woman holding glass of water

Lead the change

Whilst the sugar tax hangs in the balance of our government policy, you can take control of your own and your family’s health. Monitor and reduce the amount of sugar you consume.

  • Water is the best default drink. You could also opt for tea or smoothies, without added sugar.
  • Check the nutritional label before you purchase drinks and food. Remember, the healthiest option often doesn’t even come with a label. These are your fresh fruit and vegetables, and tap water which you can filter!

Key Point

Whilst the prices of soft drinks and other sugar-sweetened beverages will rise with a sugar tax, the costs will be significantly outweighed by its health benefits. We have seen evidence in the success of this policy in other countries. Rather than a question of "if" the sugar tax should be introduced, we need to ask "when". 

Regardless, we should be reducing our consumption of added sugars through drinks and food. Yet as rates of obesity, type 2 diabetes, and associated chronic diseases continue to rise, our government should also intervene. 



Australian Medical Association (2018). AMA Recommendations. Nutrition - 2018. Sourced from: https://ama.com.au/position-statement/nutrition-2018

Cancer Council (2019). 1 in 6 teens consume over 5kg of sugar per year from sugary drinks. Sourced from: https://www.cancer.org.au/news/media-releases/1-in-6-teens-consume-over-5kg-of-sugar-per-year-from-sugary-drinks.html

Davey, M. (2018). Sugar tax: why health experts want it but politicians and industry are resisting. The Guardian. Sourced from: https://www.theguardian.com/australia-news/2018/jan/10/sugar-tax-why-health-experts-want-it-but-politicians-and-industry-are-resisting

Deakin University (2017). Study shows sugar tax would benefit low income groups. Sourced from: https://www.deakin.edu.au/about-deakin/media-releases/articles/study-shows-sugar-tax-would-benefit-low-income-groups

Duckett, S., & Swerissen, H. (2016). A sugary drinks tax. Recovering the community.

Lloyd, P., & MacLaren, D. (2019). Should we tax sugar and if so how?. Australian Economic Review, 52(1), 19-40.

Obesity Evidence Hub (2020). Countries that have implemented taxes on sugar-sweetened beverages (SSBs). Sourced from: https://www.obesityevidencehub.org.au/collections/prevention/countries-that-have-implemented-taxes-on-sugar-sweetened-beverages-ssbs

Obesity Policy Coalition (2019). Pre-Budget submission 2019-2020 Submission to Treasury. Sourced from: https://treasury.gov.au/sites/default/files/2019-03/360985-Obesity-Policy-Coalition.docx 

Obesity Policy Coalition (2019). The case for a health levy on sugary drinks. Sourced from: https://www.opc.org.au/downloads/policy-briefs/the-case-for-australian-tax-sugar-sweetened-beverages.pdf 

Parliament of Australia (2020). Tax on sugary drinks. Chapter 6. Sourced from: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Obesity_epidemic_in_Australia/Obesity/Final%20Report/c06

Sugar Research Advisory Service (2016). Pros and cons of a sugar tax. Sourced from: https://www.srasanz.org/sras/news-media-faq/current-news/pros-and-cons-sugar-tax/


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