Kao, K.

The Health and Financial Impacts of A Sugary Drink Tax Across Different Income Groups in Canada
Kai-Erh Kao, Amanda C Jones, Arto Ohinmaa, Mike Paulden

Overconsumption of sugar-sweetened beverages (SSBs) contributes to childhood and adult obesity and increases healthcare costs. Sugary drink taxes have been implemented in several countries to curb sugar intake. There is a concern that the taxes are regressive. This study assessed the health and financial impacts of a simulated sugary drink tax across different income groups in Canada.

The current study extended Jones' Canadian sugary drink tax model to estimate the impact of a sugary drink tax on health and financial inequality. Sugary drinks consist of all types of beverages containing free sugar, including regular carbonated soft drinks, regular fruit drinks, non-diet sports drinks, non-diet energy drinks, sugar-sweetened coffee and tea, hot chocolate, non-diet flavoured water, flavoured milk, sugar-sweetened drinkable yogurt, and 100% juice. Income-specific parameters include population demographics, price elasticities, mean BMI, sugary drink consumption, mortalities, and disease epidemiology.

A 20% sugary drink tax was estimated to reduce the consumption of sugary drinks by an average of approximately 15%, with a greater reduction in the lowest income quintile. The tax was estimated to avert 690,000 DALYs over a lifetime period among the 2016 Canadian adult population. The lowest income quintile had the most estimated DALYs averted per person. The average tax burden was estimated to be $39.00 to $44.30 per person, with the middle-income quintile bearing the heaviest burden. The lowest income quintile would pay the highest proportion of their income in the tax.

The model predicts that low-income Canadians would gain the most health from a sugary drink tax. While this income group would pay the largest proportion of their incomes in tax, the difference between income groups is small. If this regressivity is a concern, then policy makers may wish to consider investing the revenue raised from sugary drinks taxes in policies that address health or income inequalities.