A proposal to increase taxes on sugar-sweetened beverages in Canada

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The problem

In 2015, nearly 17 million adults and 1.5 million children aged 5 to 17 in Canada were clinically overweight (defined as having a body mass index ^[BMI] 1 to 2 standard deviations (SD) above the mean ^[1]) or obese (BMI >2 SD above mean ^[1]). An estimated 400,000 children aged 2 to 5 years were at risk for overweight, clinically overweight, or obese ^[2]-[4].

Overweight and obesity are significant risk factors for the development of nutrition-related chronic diseases, including hypertension, dyslipidemia, hyperinsulinemia, coronary heart disease, stroke, type 2 diabetes, some cancers, non-alcoholic fatty liver disease, sleep apnea, and osteoarthritis ^[5][6]. Obese children have an increased lifetime risk of developing type 2 diabetes and cardiovascular disease ^[7]. In Canada, the annual direct health care costs of obesity are estimated to be between $4.6 billion and $7.1 billion, and are predicted to rise to $8.4 billion by 2021 ^[8].

While the causes of obesity are complex and involve multiple interacting factors, the frequent consumption of calorie-dense, nutrient-poor foods and beverages is an established and significant risk factor. Multiple studies have associated SSB consumption with overweight and obesity ^[9][10], increased rates of diabetes, hypertension, and some cancers ^[11[-[13], as well as with dental caries ^[14][15].

SSBs are defined by the World Health Organization (WHO) as containing added caloric sweeteners (e.g., sucrose, high-fructose corn syrup, or fruit juice concentrates). Such beverages include carbonates, fruit drinks, sports drinks, energy and vitamin water drinks, sweetened iced tea, and lemonade ^[16].

In 2015, the WHO recommended that adults and children limit their intake of free sugars to less than 10% of their total energy intake per day ^[17]. Free sugars include those added to food and beverages as well as those naturally present in honey, syrups, fruit juices, and concentrates. For an average adult, 10% of total energy intake approximates 50 grams (or 12 to 13 teaspoons) of free sugar daily. In Canada, a 355 mL can of sugar-sweetened soda may contain up to 40 grams (10 teaspoons) of sugar ^[18]. In 2015, Canadians were estimated to consume an average 227 mL of SSBs daily, with youth 9 to 18 years old consuming an average 430 mL daily ^[19]. Many Canadians exceeded their recommended daily intake of free sugars through SSB consumption alone ^[19].

According to one U.S. survey conducted in 2013/14, approximately 60% of children and youth aged 2 to 19 reported drinking SSBs on any given day ^[20]. In Canada, almost 15% of children and youth aged 3 to 17 years surveyed in 2014 reported drinking soft drinks, fruit drinks, or sport drinks every day ^[21]. Assuming that current SSB consumption levels hold, one modelling study for Canada predicted that greater than 2 million new cases of obesity will develop between 2016 and 2041. In addition, thousands of new cancer, type 2 diabetes, and cardiovascular disease cases per year were expected to be linked to SSB consumption ^[19].

One proposed solution

A WHO meta-analysis of 11 systematic reviews demonstrated that raising taxes can alter purchasing and consumption patterns and behaviours, with the strongest and most consistent effects seen for a levy on SSBs in the range of 20% to 50% ^[16]. This study result was consistent with findings in several other reviews ^[22]-[24] which, taken together, indicate that taxes and other pricing strategies should be considered as policy instruments to reduce SSB intake levels ^[22]. An excise tax could be especially effective in decreasing SSB consumption ^[25]-[27] and reducing negative health impacts at a population level ^[22][27][28]. Several countries ^[25][29][30] and some U.S. jurisdictions ^[26] have successfully implemented excise taxes, with documented positive effects. A 3.3% decrease in SSB sales was noted after France levied a relatively low SSB excise tax of €0.11/1.5 L (approximately 16 cents/1.5 L) ^[31]. In Berkeley, California, consumption of SSBs decreased by 21% in surveyed neighborhoods 4 months after a $0.01/ounce tax ^[26] was implemented. In Mexico, a 9% to 17% reduction in SSB purchases was observed in the year following implementation of a 1 peso/L SSB excise tax (about a 10% price increase) ^[25].

While studies of the direct health benefits of a tax on SSBs are still lacking, simulation modelling in Canada has predicted that a targeted 20% excise tax could prevent 12,000 cases of cancer, more than 30,000 cases of ischemic heart disease, almost 5000 strokes, and close to 1,400,000 cases of type 2 diabetes, over a 25-year period spanning 2016 to 2041 ^[19]. While these projections are based on modelling and economic assumptions, taxing SSBs would save health costs, probably substantially, over the same time period ^[19].

Any revenue generated from SSB taxes should be directed to fund new or existing healthy active living programs (e.g., to subsidize fruits and vegetables where needed, improve access to physical activity opportunities, and support food literacy programs). Subsidizing fruits and vegetables has been demonstrated to increase consumption ^[16][23]. Furthermore, reducing fruit and vegetable prices has been associated with lowering body weights in children from low-income households ^[22].

One U.S. study used nationwide data sets to estimate the economic impacts of taxing SSBs. Results showed that while individuals in a low income bracket would pay slightly more annual SSB tax than individuals in higher brackets because of higher baseline SSB consumption, the difference was small (a little over one USD dollar per year) ^[31]. Although SSB taxes may be considered regressive in nature, studies have found that their effects, as well as the health care gains they generate, are progressive ^[32][33]. Tax equity would be further ensured if SSB tax revenues were dedicated to funding initiatives that benefit disadvantaged populations ^[33]. Implementation of an SSB tax would be optimally effective as part of larger national strategies to improve nutrition, reduce poverty, and advance the overall health status of Canadians ^[34]. Timely evaluation of this policy is also recommended, to assess effectiveness and avoid negative impacts on families who are already experiencing food insecurity ^[35].

Recommendations

• The Canadian Paediatric Society recommends that an excise tax of at least 20% be applied to all SSBs sold in Canada, as one step toward addressing overweight and obesity, and future health consequences of these conditions, in young people. Other Canadian organizations support this tax, include the Dietitians of Canada ^[18], the Childhood Obesity Foundation ^[36], the Heart and Stroke Foundation of Canada ^[37], and Diabetes Canada ^[38].
• The revenue generated by an SSB tax should be used to expand funding for healthy active living programs, including subsidizing fruits and vegetables initiatives, improving access to physical activity opportunities, and supporting food literacy programs. Information on how tax revenues are allocated should be shared with the public.
• The effects of an SSB excise tax on consumption rates must be evaluated in a timely manner, along with anticipated long-term effects on overweight and obesity statistics, nutrition-related chronic disease rates and rates of dental caries. Specific attention to possible impacts on food insecure households is essential.

Acknowledgements

This statement was reviewed by the Canadian Paediatric Society’s Action Committee for Children and Teens. The CPS would also like to acknowledge the contributions from Dietitians of Canada to the development of this policy.

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CANADIAN PAEDIATRIC SOCIETY NUTRITION AND GASTROENTEROLOGY COMMITTEE

Members: Linda M. Casey MD, Eddy Lau MD (Board Representative), Catherine M. Pound MD (Chair), Ana M. Sant’Anna MD, Pushpa Sathya MD, Christopher Tomlinson MB, ChB, PhD
Liaisons: Becky Blair MSc RD, Dietitians of Canada; Patricia D’Onghia MPH RD, Health Canada; Tanis R. Fenton PHD RD, Dietitians of Canada; Laura Haiek, Breastfeeding Committee for Canada; Deborah Hayward, Bureau of Nutritional Sciences, Health Canada; Sarah Lawrence MD, Canadian Pediatric Endocrine Group
Principal authors: Catherine M. Pound MD, Jeffrey N. Critch MD, Paul Thiessen MD, Becky Blair MSc RD

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References

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Disclaimer: The recommendations in this position statement do not indicate an exclusive course of treatment or procedure to be followed. Variations, taking into account individual circumstances, may be appropriate. Internet addresses are current at time of publication.