The impact on productivity of a hypothetical tax on sugar-sweetened beverages

Abstract

1 Present address: 1 Jordan Drive off Freetown Road, Freetown, Sierra Leone 2 Research Highlights A 20% tax on sugared sweetened drinks results in large productivity benefits. Productivity gains reached 1.9 % of total annual health expenditure in 2010. Lifetime productivity gains in the paid sector amount to AU$751 million. Lifetime productivity gains in the unpaid sector amounted to AU$1,172 million. We used an adapted multi-state lifetable Markov model 3 Abstract: Objectives: To quantify the potential impact of an additional 20% tax on sugarsweetened beverages (SSBs) on productivity in Australia. Methods: We used a multi-state lifetable Markov model to examine the potential impact of an additional 20% tax on SSBs on total lifetime productivity in the paid and unpaid sectors of the economy. The study population consisted of Australians aged 20 years or older in 2010, whose health and other relevant outcomes were modelled over their remaining lifetime. Results: The SSBs tax was estimated to reduce the number of people with obesity by 1.96% of the entire population (437,000 fewer persons with obesity ), and reduce the number of employees with obesity by 317,000 persons. These effects translated into productivity gains in the paid sector of AU$751 million for the working-age population (95% confidence interval: AU$565 million to AU$954 million), using the human capital approach. In the unpaid sector, the potential productivity gains amounted to AU$1,172 million (AU$929 million to AU$1,435 million) using the replacement cost method. These productivity benefits are in addition to the health benefits of 35,000 life years gained and a reduction in healthcare costs of AU$425 million. Conclusions: An additional 20% tax on SSBs not only improves health outcomes and reduces healthcare costs, but provides productivity gains in both the paid and unpaid sectors of the economy.

The ethics of excise taxes on sugar-sweetened beverages

“…Evidence to date projects positive economic impacts from large reductions in health care costs, [3,4] and increased productivity. [56] The net impact of SSB excise taxes is likely to be greater equality because low-income individuals are expected to accrue the largest health benefits from the tax. The tax appears to reduce SSB consumption in low-income households the most, [15] and to date, tax revenues have largely been spent on health and social equity in the US.…”

“…Modeling studies predict that SSB taxation will result in sizeable health care cost savings [3,4] and increased productivity by reducing chronic disease. [56] However, public announcements from business owners and industry-sponsored reports have claimed negative economic impacts of the tax, particularly job loss. The peer-reviewed empirical research thus far does not support claims of job loss.…”

“…The extent and magnitude of harm resulting for job losses would need to be evaluated against benefits of job creation, healthcare cost savings, [3,4] increased productivity. [56] Macroeconomic impacts of SSB taxes are expected to be positive for the reasons outlined above; however, economic impacts on individuals will vary by their response to the tax and whether they are reached by funded programs. Those who make no alterations in SSB purchasing and who are unaffected by tax-funded programs would likely experience a net increase in costs to sustain their SSB purchasing.…”

“…The extent and magnitude of harm resulting for job losses would need to be evaluated against benefits of job creation, healthcare cost savings, [ 3 , 4 ] increased productivity. [56] …”

The true price of sugar‐sweetened disease: political inertia requires renewed, strategic action

“…In the quest for cost‐effective policies, new Australian research explored potential benefits of combinations of price increases and subsidies, 14 and showed the value of effective SSB taxation not only on improved health outcomes and reduced health care costs but also in productivity gains in both the paid and unpaid sectors of the economy 15 . A 20% price increase on SSBs was forecast to generate $640 million annually in tax revenue, with mean lifetime health care cost savings of $1.7 billion 16 …”