A tax on sugary drinks would save 13,000 lives and raise $43B, Canadian study suggests

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Can taxing sugary drinks reduce obesity?
WATCH: A new report commissioned by various health organizations says Canadians are consuming way too many sugary drinks, and it's contributing to obesity and serious illness. As Allison Vuchnich reports, the study also calls on the Canadian government to impose a tax on sugary drinks – Mar 16, 2017

Would a tax on sugary drinks stave off climbing rates of type 2 diabetes, heart disease and obesity? New Canadian research suggests that a sugary drinks tax could save 13,000 lives and even raise $43 billion over the course of 25 years.

To be clear, the tax wouldn’t be implemented for consumers. The levy, instead, would be placed on the makers of sugar-sweetened drinks – manufacturers would have to pay a 20 per cent tax, according to new research out of the University of Waterloo.

The findings were commissioned by a handful of leading health organizations from Heart & Stroke to the Canadian Cancer Society and Diabetes Canada.

“A Canadian tax on sugary drinks has the potential to reduce the prevalence of obesity and to improve the health of Canadians, while providing substantial revenue to support other public health measures,” Dr. David Hammond, an associate professor at the University of Waterloo, said.

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READ MORE: Sugary drinks tied to 63,000 deaths in the next 25 years, Canadian report warns

When excise taxes are slapped on goods, manufacturers typically pass the increased price for production onto the consumers, though. So the tax could inflate prices of sugary drinks for Canadians at the grocery store. It’s already applied to alcohol, tobacco, and gasoline, as examples.

Companies can absorb the inflated price but, more often than not, it’s passed onto the consumer, a Heart & Stroke spokesperson said. The researchers decided a 20 per cent levy on manufacturers is the magic number to create change.

If manufacturers were slapped with a 20 per cent tax on the sugary drinks they make, the research suggests that about $43.6 billion would be raised in government revenue in 25 years. That’s about $1.7 billion per year in income from the tax.

READ MORE: How much sugar and how many calories are in your drink?

Another $11.5 billion would be saved from health-care spending, Hammond’s report is projecting.

The report suggests that the tax, over the course of 2.5 decades would prevent more than 6000,000 cases of obesity, 200,000 cases of type 2 diabetes, and more than 60,000 cases of heart disease.

“We know Canadians – including our children – are consuming too much sugar and sugary drinks in particular are harming our health. These products are not essential groceries, providing little to no nutritional value, and a levy is one proven way to help reduce consumption and support healthy living initiatives,” Mary Lewis, vice president of research, advocacy and health promotion at Heart & Stroke, said.

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READ MORE: Are sugar limit guidelines based on robust science? This Canadian study says no

Taxes like this already exist in Mexico, France, Hungary, Finland, Norway, Belgium, Chile and Barbados.

In California, for example, manufacturers pay a tax based on volume – about one cent per ounce or 34 cents per litre. In the U.K., there’s a lower tax rate for drinks with total sugar of 50 grams per litre, and a higher rate for drinks with 80 grams or more of sugar per litre.

So far, it seems to be working: consumers end up drinking less sugary drinks.

The study doesn’t look at where the revenue from this tax would go to, but it could be applied to healthy living initiatives, like subsidizing the cost of fruits and vegetables or healthy lunch programs at school, a spokesperson said.

For its part, the Canadian Beverage Association said that the new report isn’t based on data that reflects the Canadian beverage marketplace.

“Fiscal interventions like consumption taxes have not proven to be successful in terms of obesity reduction. What works are real, meaningful, coordinated efforts by government, industry, and healthcare and consumer stakeholders to implement evidence-based solutions,” spokeswoman, Carolyn Fell, said in a statement.

“Sound public health policy must be based on the most substantive, rigorous sources of research available,” she said.

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The latest findings are the second half of research on sugary drinks commissioned by the Canadian health organizations.

In February, the first half of the research warned that sugary drink consumption could result in 63,000 deaths over the next 25 years while costing the health care system more than $50 billion.

READ MORE: How much sugar should you be eating? How to follow the WHO’s guidelines

In 2014, the World Health Organization (WHO) dropped the gauntlet on consumers with its updated recommendations: sugar intake should be just five per cent of your total calories, half of what the global health agency had recommended years ago.

For an average woman who eats about 2,000 calories a day, that’s roughly 25 grams of sugar – less than half of a can of pop, about two portions of yogurt or an entire Caramilk bar.

READ MORE: How much sugar is in Nutella? Canadian doctor decodes what’s in the hazelnut spread

While soda sales are down, other sugary drinks are gaining in popularity, the initial report warned. Between 2004 and 2015, sales of energy drinks soared by 638 per cent, sweetened coffees by 579 per cent, and flavoured water by 527 per cent.

One 250-millilitre can of a popular energy drink contains 26 grams of sugar; a wildly popular seasonal coffee beverage contains 50 grams of sugar in a 473-millilitre serving.

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On average, Canadians purchase an average of 444 millilitres of sugary drinks every day, the report said.

With files from Tania Kohut

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