Taxing sugary drinks has a positive effect on both the health of populations and public finances, the World Bank estimated on Wednesday, which encourages states to consider taking measures in this regard. This would “increase the productivity and revenue” of the states, while also improving the health of residents by encouraging them to consume alternative beverages such as water, according to a blog post published by the World Bank. This type of tax called “Pigouvian” is based on the principle of the price signal, increasing that of the target products to reduce their consumption.
For now, more than half of the world population lives in countries that have implemented this type of taxation, mainly in poor and emerging countries. By contrast, most G20 countries have not implemented specific taxes on sugary drinks. Coverage is also uneven by region: 98% of the population in South Asia and 81% of the population in Latin America are thus affected, while this is only the case for 21% of the population in North Africa. and the Middle East and even 10% of those in East Asia and the Pacific.
Drinks that increase healthcare costs
To be more effective, this tax must increase prices significantly enough and target a broad category of products, including chocolate drinks or fruit juices. The World Bank regrets, however, that, in most cases, this taxation is not sufficiently targeted, also integrating bottled water, thus reducing potential effects in terms of public health.
The institution recalls that sugary drinks “are related to obesity, cardiovascular disease, diabetes and dental problems.” These health problems affected two billion people in 2016, 70% of them living in poor or emerging countries. However, these diseases also have an economic impact by “reducing life expectancy, productivity and increasing health spending.” According to studies carried out in Mexico and the United Kingdom, the implementation of a tax on these beverages led to a reduction in obesity, particularly among girls.
Source: BFM TV
