Leena Watts
The consumption of sugary drinks has been linked to an increased risk of developing cancer, diabetes, obesity, and dental caries. As a result, over 50 countries have implemented taxes on sugar-sweetened beverages (SSBs) to reduce their consumption. While the majority of these taxes do not apply to diet soft drinks, some governments have singled out diet drinks for taxation due to the presence of artificial sweeteners, which have been linked to liver cancer. In addition, there is evidence that excluding diet drinks from SSB taxes can strongly incentivize their supply and consumption.
| Characteristics | Values |
|---|---|
| Number of countries with taxes on sugar-sweetened beverages | Over 50 |
| Countries with a tax on diet drinks | Croatia, Poland, Spain, the Philippines, and many more |
| Countries with a tax on diet drinks by region | Latin America and the Caribbean, the Middle East and North Africa |
| Countries with a tax on diet drinks by income | Low-income economies |
| Reasoning behind a tax on sugary drinks | To reduce the health and economic burden of dental caries, diabetes, and obesity |
| Other reasons for a tax on sugary drinks | Sugary drinks contain no nutritional benefit beyond calories and are linked to ill health |
| French study on sugary drinks | Linked consumption of sugary drinks to a higher risk of developing cancer |
| UK Soft Drinks Industry Levy | Introduced in April 2018 |
| UK tax rates | Drinks with 5 to 8 g per mL of sugar are taxed at £0.18 per L, and those with >8 g of sugar per 100 mL are taxed at £0.24 per L |
| US tax on sugary drinks | Passed by localities and some states |
| US tax rates | 1 cent per ounce on distributors of sugar-sweetened beverages |
| Hungary's tax on sugary products | 4% tax on products with large quantities of sugar and salt |
| Mexico's volumetric SSB tax | 1 peso per liter |
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What You'll Learn
- Artificial sweeteners in diet drinks may cause cancer
- Diet drinks are included in SSB taxes by default in many countries
- Diet drinks are exempt from some taxes, which incentivises their consumption
- Diet drinks are taxed in some places, e.g. Vermont, Croatia, Poland, Spain, and the Philippines
- Taxing diet drinks could raise money for preventative health programs
Artificial sweeteners in diet drinks may cause cancer
Diet soft drinks are often sweetened with artificial sweeteners instead of sugar. These artificial sweeteners have been a subject of concern for many, with some studies suggesting that they may be linked to cancer.
The NutriNet-Santé cohort study, which examined aspartame intake from all dietary sources, found that adults who consumed higher amounts of aspartame were more likely to develop cancer overall, as well as breast cancer and obesity-related cancers. Similarly, the study reported that acesulfame-K intake was associated with a slightly higher risk of cancer overall. However, it is important to note that no other studies have examined the link between acesulfame-K and cancer.
In contrast, a range of studies have found no evidence that artificial sweeteners like sucralose cause cancer in humans. Additionally, large cohort studies, such as the NIH-AARP Diet and Health Study, have not shown a clear association between aspartame consumption and the development of lymphoma, leukemia, or brain cancer.
While the 2023 IARC assessment of aspartame concluded that there was "limited evidence" for carcinogenicity in humans, it classified aspartame as possibly carcinogenic to humans (Group 2B). This classification is based on limited evidence for cancer in humans, specifically a type of liver cancer called hepatocellular carcinoma, as well as limited evidence in experimental animals and potential mechanisms for causing cancer. However, the Joint Expert Committee on Food Additives (JECFA) reaffirmed the acceptable daily intake (ADI) of 0-40 mg/kg body weight for aspartame, stating that consumption within this limit is safe.
The debate around taxing diet soft drinks is primarily driven by concerns about the health impact of sugary drinks, with obesity and diabetes being the main areas of focus. The goal of such taxes is to encourage healthier diets and reduce the burden of obesity-related diseases. While many countries have implemented taxes on sugar-sweetened beverages, they often exclude diet soft drinks, as evidenced by the French tax on sugary drinks, which applies to regular soft drinks but not diet versions.
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Diet drinks are included in SSB taxes by default in many countries
Diet drinks are often touted as healthier alternatives to their sugary counterparts. However, the potential for consumption of artificial sweeteners leading to adverse health effects cannot be ruled out. In fact, aspartame has been classified as 'possibly carcinogenic to humans' by the International Agency for Research on Cancer (IARC) and the World Health Organization.
Many governments already tax diet drinks, particularly in lower-income economies. Three out of four SSB taxes worldwide, and all SSB taxes in low-income economies, apply to diet drinks. These drinks are much more likely to be taxed in Latin America and the Caribbean, and in the Middle East and North Africa, than in North America or Europe and Central Asia.
The inclusion of diet drinks in SSB taxes is partly due to the Harmonized System of Tariff Codes used to identify taxed products, which does not distinguish between added sugar and artificial sweeteners. As a result, low-calorie and diet beverages fall under the SSB tax in nearly three-quarters of EU countries with SSB taxes. However, some countries, such as the United States, have specifically excluded diet sodas from their local SSB taxes.
The taxation of diet drinks can have complex effects on consumer behaviour and industry practices. Excluding diet drinks from SSB taxes can strongly incentivize their supply and consumption, as seen in the UK and Catalonia, Spain. On the other hand, including diet drinks in SSB taxes may encourage consumers to switch to healthier alternatives such as unsweetened bottled water or other beverages like milk, fruit juice, or tea. Additionally, SSB taxes can drive manufacturers to reformulate their products to reduce sugar levels, as observed in the UK.
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Diet drinks are exempt from some taxes, which incentivises their consumption
Diet drinks are often considered healthier alternatives to their sugar-laden counterparts, and as such, they are sometimes exempt from the taxes imposed on sugary drinks. This exemption incentivises their consumption, as they become relatively cheaper than taxed beverages.
The decision to tax sugary drinks is often driven by the desire to reduce sugar consumption and improve public health. Over 50 countries have implemented taxes on sugar-sweetened beverages (SSBs), with the majority of published evidence suggesting that these taxes lead to behaviour changes and improved health outcomes. However, the effectiveness of these taxes in reducing sugar consumption and improving health can be influenced by various factors, including industry responses such as product reformulation and marketing strategies.
While diet drinks are exempt from some taxes, they are not universally untaxed. Some governments have specifically targeted diet drinks for taxation due to concerns about the health impacts of artificial sweeteners. For example, Croatia, Poland, Spain, and the Philippines have singled out drinks containing artificial sweeteners in their tax policies. In the Philippines, an excise tax is levied on drinks containing added sugar or artificial sweeteners, with a higher rate for those containing high-fructose corn syrup.
The inclusion or exclusion of diet drinks in taxation policies is a complex issue. On the one hand, exempting them from taxes may encourage their consumption as a healthier alternative. On the other hand, there are concerns about the potential health risks associated with artificial sweeteners, as evidenced by the classification of aspartame as "possibly carcinogenic to humans" by the International Agency for Research on Cancer (IARC).
Additionally, the taxation of diet drinks can be influenced by local considerations, such as beverage market structure and substitution effects. The decision to tax or exempt diet drinks may also depend on the tax objectives and the specific context of each jurisdiction. For example, diet drinks are more likely to be taxed in Latin America, the Caribbean, the Middle East, and North Africa, compared to regions like North America and Europe.
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Diet drinks are taxed in some places, e.g. Vermont, Croatia, Poland, Spain, and the Philippines
Diet drinks are included in SSB (sugar-sweetened beverage) taxes in many places. This is because the systems used to identify taxed products do not differentiate between added sugar and artificial sweeteners. Governments are also increasingly considering the health effects of artificial sweeteners when imposing these taxes.
In Vermont, soft drinks are subject to sales tax, and some municipalities impose an additional local option tax of 1% on top of the state sales tax. Soft drinks are defined as nonalcoholic beverages that contain natural or artificial sweeteners. Bottled water is exempt from sales tax only if it does not contain sweeteners.
In Croatia, Poland, and the Philippines, diet drinks are also singled out for taxation. In the Philippines, this is specifically targeted at non-alcoholic beverages that contain added natural or artificial sugar. In Poland, a tax on soft drinks was implemented in 2021, which is estimated to generate over $1 billion in annual revenue for the government.
Spain also implemented a VAT increase for sweetened and sugary drinks in 2021, from 10% to 21%. This increase covered both sugary drinks and artificially and naturally sweetened beverages. This has led to an increase in unit prices across all soft drink categories, with no negative impact on the performance of reduced-sugar options.
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Taxing diet drinks could raise money for preventative health programs
Taxing diet drinks is an increasingly common strategy for governments to tackle the global obesity crisis and its economic implications. Over 50 countries have implemented taxes on sugar-sweetened beverages (SSBs), with many including diet drinks in these taxes. While some countries have introduced specific excise taxes on diet drinks, others have broader SSB taxes that include diet drinks by default.
The inclusion of diet drinks in SSB taxes can incentivize their supply and consumption, as seen in the UK and Catalonia, Spain. This is because they are often marketed as healthier alternatives to sugary drinks. However, evidence suggests that artificial sweeteners commonly found in diet drinks, such as aspartame, may be harmful to health. The International Agency for Research on Cancer (IARC) has classified aspartame as 'possibly carcinogenic to humans'. Therefore, including diet drinks in SSB taxes can help discourage their consumption and promote healthier alternatives like water.
Taxing diet drinks can also raise significant revenue for governments, which can be spent on preventative health programs. For example, Australia estimates that a tax on sugary drinks could raise annual government revenue of up to $937 million. This revenue could be used to promote safe water access and other initiatives to improve population health.
While there are challenges in implementing health-related food taxes, taxing diet drinks can be a valuable tool in reducing the health and economic burden of obesity and related diseases. It encourages companies to reformulate their products with less or no sugar and can lead to a change in consumer behavior, as seen in the UK where sugar consumption from sugary drinks is expected to reduce by up to 25% by 2028-29.
In conclusion, taxing diet drinks can be an effective strategy to raise money for preventative health programs and improve public health outcomes. It encourages the consumption of healthier alternatives, reduces sugar intake, and provides funding for initiatives to tackle obesity and other diet-related issues.
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Frequently asked questions
Diet drinks are often sweetened with low/zero-calorie artificial sweeteners, which have been linked to liver cancer.
Some countries that tax diet soft drinks include Croatia, Poland, Spain, the Philippines, and France.
Soda taxes are usually implemented as excise taxes, with the tax rate depending on the sugar content of the drink. For example, the UK's Soft Drinks Industry Levy imposes a higher tax rate on drinks with more than 8g of sugar per 100ml.
Soda taxes can reduce sugar consumption, improve public health, and generate revenue for governments. They can also incentivize manufacturers to reformulate their products to contain less sugar.
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