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Background

Discuss about the Tax Policy and Obesity Epidemic.

The social determinant of health is the social and economic factors affecting the individual health status.  These are the health promoting factors that affect the living and working condition of an individual. The distribution related to the social determinant is shaped up by public policies that influence prevailing political ideologies. According to World health Organization unequal distribution of health damages the society is caused due to toxic combination of poor policies. The report is based on the soft drink tax and its implication in current scenario.  Soft drink tax is a tax or surcharge designed to reduce consumption of the drinks that have added sugar. The drink covered under the tax is carbonated drink, un-carbonated drink, energy drink etc.  The tax is related to public debate and only levied if it is in interest of the nation; World Health Organization promotes tax on soft drinks as these drinks are deteriorating the health of every individual in the society. The purpose is to discourage unhealthy diets and reduce the growing concern regarding obesity (Metherell, 2016).

Diabetes is a growing concern in the recent time in the developed and the developing countries. There is a shift in the eating and drinking behavior of an individual causing serious health issue.  Unlike sugar which is consumed through the normal food sugar consumed through the soft drink overload the pancreas and liver causing heart disease.  Obesity is known to be a serious global and health issue causing a direct impact on the health of people in growing economy (Martin, 2016). Consumption of high amount of sugary drinks is directly affecting the health and causing excess weight and obesity.  The excess consumption of sugary drinks by the young generation is affecting the concern of public health professional (Why a soft drinks tax is not the answer, 2017).

Australia has some of the highest rate of obesity and overweight and is consistently growing @ of 28 percent, in Australia adults are almost obese and over a quarter children are facing obesity. It is due to highly processed energy dense consumption of soft drink that is affecting the health concern of the population.  Sugared drinks are the main reason causing a serious impact to the health of children. It is believed that prevention of the consumption of soft drink is causing excess obesity. Some are planning to introduce a beverage tax to discourage the consumption of drink that is directly affecting the health of an individual (McKeith, 2016). The soft drink tax will have received a mixed response from the public in the recent time. It is therefore come important for the countries to consider the taxation not to create the revenue but to create a healthy atmosphere.

Purpose

A tax on the sugar will reduce the consumption by 15 percent and will increase the budget by $500 million. The Grattan Institute has recommended that a sugary drink is increasing the obesity rate. It is calculated that the obesity costs taxpayers around $ 5.3 Billion annually. One out of three Australian are now known as obsessed.  They are planning to introduce tax @ 40 percent per 100 grams of the sugar.  This will increase the price of two liter bottle by 80 cent.  The food industry has shown that that the sugarcane growers has opposed the proposal of sugar taxes  saying that there are no viable proof affirming that the sugary drinks are harmful.  There are already heavy taxes on the products like alcohol and tobacco affecting the health concern. Similarly soft drinks are affecting the health of an individual that have a real impact on the health of an individual (Noone, 2016). By taxing the sweetest drink the effect of the harmful drink will be slightly reduced especially for children. In recent time Kids are consuming high amount of soft drinks that is affecting the health. A price increase by 20 percent will directly drop tee sale of the product by 12 percent.  This will reduce the cases of obesity by 1 percent nationwide. This will help in protecting the rights of the kids and will protect them against obesity.  A tax on the sugary drinks is the key recommendation made by the World health organization.  The approach is supported by the YMCA, Australian Dental Association, the Committee of Presidents of Medical Colleges, the Public Health Association, and even Jamie Oliver (Davies, 2016).

According to Dr. Duckett the tax model will raise $ 500 million for the budget by targeting on the soft drinks consume. The tax is regressive as the total spending of household on soft drinks is only .75 percent of the total household income.  So there will be a regressive effect on the small portion of household income.  The soft drink industry has overestimated the impact of soft drink tax and opposes the taxation due to heavy implication.  By looking at the current trend 80 percent of the sugar in Australia is exported and the remaining is used for the different type of food and drink. In short the impact on the soft drink industry will be very small. But there are at time the company can increase the overall profitability. Deputy Prime Minister Barnaby Joyce called sugary drink tax as "bonkers mad" and a "moralistic tax" that will create a huge impact on the sugar farmers in the North Australia.

Impact on the Industry

Often there are circumstances where the tax on the soft drink failed. In 2012 Danish government introduced Fat Tax as it was repealed after a period of 18 months. There was negative impact on the economy due to inflation and the rising administrative cost (Duckett, 2016).

  • Increase in administrative costs
  • Reduced jobs
  • Higher food prices
  • No visible enhancement to public health


Majority of company affirmed that thee taxes has a direct impact on the economy of the country rather than on their health. Moreover it is believed that most of the local producers are exporting the goods which mean that the tax won’t affect them. The global companies will however be affected due to levy of the tax till some extent.  The UK tax is 24 pence per liter of Coca Cola and a little less for Fanta. There is certain loophole in the UK soft drink tax that has put the overall intention under consideration. This will no longer affect much of the concern related to obesity. This is considered to be a deterrent tax and will raise the revenue up to some level. The intension need to support the factors that affect the health of an individual on a long run. The sugar tax in Australia doesn’t make unequal Australia (Fletcher, Frisvold & Tefft, 2010). The tax on the sugar will hit the poor. According to economist, Government needs to levy taxes on alcoholic beverages and cigarettes. This tax will not affect the wealthy person. This will however cause the income disparities.  The income disparity in Australia is very high. The average households in Australia make four times as much as the bottom 10 percent (Fletcher, Frisvold & Tefft, 2010).  Below mentioned graph will help in determining the situation occurring in the current household structure in Australia.

Some of the people believe that soft drink should be taxed similar like cigarettes and leaded petrol in order to boost economy. The revenue collected from the tax can be used to tackle obesity acceding to a news report.  The super tax will be applied on the sugar content of the non-alcoholic water based beverages in addition to the GST. Unless the soft drink tax that will increase the overall intake.  According to the report almost 30 percent of the Australian adults were clinically obese and another 35 percent are considered to be overweight.  Those who are suffering from obesity generally visit the practitioner and depend on the medicines in general. This is affecting the general health parameter of Australians.  The cost to taxpayer of obesity amounts to around $ 5 billion per year. The report prepared by the Grattan Institute has stated that most of the problem related to obesity is caused due to soft drinks.  Half of the added sugar comes from the drinks and the one third comes from the soft drink. The taxes on the soft drink are applied at United Kingdom, Ireland, Belgium, France, Fiji, Mexico, and South Africa (Mytton, Clarke & Rayner, 2012). According to Grattan an Institute has stated that the taxes have however reduced the consumption by 15 people as people switched t other drinks.  The tax on the soft drink will encourage the manufacturer to put less sugar in the drinks. This will reduce the overall tax on the drinks in coming time.  According to worlds health organization stabilizing the obesity is the primary focus in the current scenario.  The sugar industry will see a drop in the sale by 1 percent which will have a minimal impact on the oversea price. The tax will however affect the low level income category than the high income households. The low income household spends a little on the soft drinks. The extra budget earned through the tax can be used in order to promote the health facilities (Lustig, Schmidt & Brindis, 2012).

Impact of Soft Drinks on an Individual

It is however recommended that the tax on the soft drink is a rowing necessity in the current scenario. This will however put a positive impact on the Australian economy. In the recent time there have been rising cases of obesity. This is affecting the health of the teenager more specifically. The growing concern has a long term impact not only on the health of the individual but also on the economy (Efrat & Efrat, 2012). It is recommended that the soft drink tax need to be levied as it will not only reduce the consumption of the drink to a level but will also help in improving the current health status. In the current scenario many countries have imposed the tax in order to bring attention of people to the grave issue. Consumption of soft drink has a long lasting impact on the health of the individual (Moretto, Kendall, Whitty, Byrnes, Hills, Gordon & Comans, 2014). This taxation process will bring attention of people to the issue so that they can understand that the consumption will affect their health. Moreover the taxation is professed by the WHO. It is necessary to create taxation in a systematic manner as this will improve the condition as well. .  These are the health influencing factors that initially affects the individual private and public behavior.  In the recent time consumption of soft drink has raised a huge concern among people. In the recent time the health of people is getting affected due to soft drink consumption (Hafekost, Mitrou, Lawrence & Zubrick, 2011). However it is known that there are other factors also that are affecting the health of an individual. It is the responsibility of the government to impose tax on those products that are mainly responsible for deteriorating the health. In recent time incidence pertaining to diabetes has increased. Soft drink has been responsible for the incidence where health of an individual is getting affected by the various factors accompanying the health of an individual (Hector, Rangan, Gill, Louie & Flood, 2009).  In this way the international companies will reduce the sugar content in the soft drink to some extent. It will help in reducing the impact on the individual health as well. There is a huge need to find out various ways through which the health of an individual can be improved through the alternative means (Veerman, Sacks, Antonopoulos & Martin, 2016).

Similarities with Other Taxes

Conclusion

To conclude it is essential to understand the importance of imposing the tax in the recent time. The world is changing at a fast rate so are the eating habits. The report states the purpose for which the government Authorities should impose the tax. Looking at the current market trends it is very well visible that the consumption of soft drink is affecting the health of an individual to a large extent. The government is planning to impose tax on the people which will reduce the extent of obesity in general.  There is a necessity to regulate the authorities so that the consumption of the soft drinks could be restricted. At present there is no such tax which is restricting the consumption o the soft drink. Looking at the current scenario it has become important to find out the most appropriate way through which the government can manage the issues related to the soft drink consumption. By looking at the current trend 80 percent of the sugar in Australia is exported and the remaining is used for the different type of food and drink. In short the impact on the soft drink industry will be very small. A very small portion is used by the local. This reflects that the localities will be less affected with the tax. It is however necessary for an individual to develop effective health strategies so that one can grow. The current changes in the health pattern are a matter of great concern and need to be taken with utmost care so that the health of the people can be managed effectively.

References

Davies,J.(2016). Should We Be Taxing Sugar? (ONLINE).Retrieved from: https://www.canstar.com.au/health-insurance/should-we-be-taxing-sugar/ (Accessed on: 28 March 2017)

Duckett,S.(2016) Why we should tax sugary soft drinks. (ONLINE).Retrieved from: https://grattan.edu.au/why-we-should-tax-sugary-soft-drinks/ (Accessed on: 28 March 2017)

Efrat, M. W., & Efrat, R. (2012). Tax policy and the obesity epidemic. JL & Health, 25, 233.

Fletcher, J. M., Frisvold, D. E., & Tefft, N. (2010). The effects of soft drink taxes on child and adolescent consumption and weight outcomes. Journal of Public Economics, 94(11), 967-974.

Fletcher, J. M., Frisvold, D., & Tefft, N. (2010). Can soft drink taxes reduce population weight?. Contemporary Economic Policy, 28(1), 23-35.

Hafekost, K., Mitrou, F., Lawrence, D., & Zubrick, S. R. (2011). Sugar sweetened beverage consumption by Australian children: implications for public health strategy. BMC public health, 11(1), 950.

Hector, D., Rangan, A., Gill, T., Louie, J. C. Y., & Flood, V. M. (2009). Soft drinks, weight status and health: a review.

Lustig, R. H., Schmidt, L. A., & Brindis, C. D. (2012). Public health: The toxic truth about sugar. Nature, 482(7383), 27-29.

Martin,P.(2016). A $520 million soft drink tax will probably make us less fat. But here's what it will do to prices. (ONLINE).Retrieved from:  https://www.smh.com.au/federal-politics/political-news/a-520-million-soft-drink-tax-will-probably-make-us-less-fat-but-heres-what-it-will-do-to-prices-20161122-gsuw17.html (Accessed on: 28 March 2017)

McKeith,S.(2016). Soft Drinks Should Be Hit With 40 Cent Sugar Tax: Grattan Institute. (ONLINE).Retrieved from:  https://www.huffingtonpost.com.au/2016/11/22/soft-drinks-should-be-hit-with-40-cent-sugar-tax-grattan-instit/ (Accessed on: 28 March 2017)

Metherell,L.(2016). Sugar tax could cut soft drink consumption, help halt growing obesity rates: Grattan Institute,(ONLINE).Retrieved from:  https://www.abc.net.au/news/2016-11-23/sugar-tax-could-cut-soft-drink-consumption-by-15-per-cent/8048974 (Accessed on:28 March 2017)

Moretto, N., Kendall, E., Whitty, J., Byrnes, J., Hills, A. P., Gordon, L., ... & Comans, T. (2014). Yes, the government should tax soft drinks: findings from a citizens’ jury in Australia. International journal of environmental research and public health, 11(3), 2456-2471.

Mytton, O. T., Clarke, D., & Rayner, M. (2012). Taxing unhealthy food and drinks to improve health. BMJ, 344(may15 2), e2931-e2931.

Noone,Y.(2016). Sugar tax could raise $400m for the government . (ONLINE).Retrieved from:  https://www.sbs.com.au/topics/life/health/article/2016/04/14/sugar-tax-could-raise-400m-government (Accessed on: 28 March 2017)

Veerman, J. L., Sacks, G., Antonopoulos, N., & Martin, J. (2016). The impact of a tax on sugar-sweetened beverages on health and health care costs: A modelling study

Why a soft drinks tax is not the answer.(2017). (ONLINE).Retrieved from:  https://www.australianbeverages.org/for-consumers/soft-drink-tax-answer/ (Accessed on: 28 March 2017)

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