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Jessica Fino 19 Apr 2017 02:00pm

First US tax on sugary drinks cuts sales by almost 10%

The first US city to introduce a sugar tax on soft drinks in a bid to reduce obesity has seen sales of the beverages fall by 9.6%, while purchases of water have increased

According to research published in PLOS Medicine, sugar-sweetened beverage sales declined in the Californian city of Berkeley one year after the introduction of the tax, but rose by 6.9% outside the city.

Meanwhile, sales of water increased by 15.6%, as prior studies have suggested that individuals who substitute beverages in the wake of increased sugar drink prices are likely to choose water, diet soft drinks or fruit drinks.

Berkeley introduced the tax on sugar-sweetened beverages in March 2015.

The data collected by the report pointed out to increases in the sale of water and fruit drinks, but not diet drinks.

Moreover, the report found that, despite the increase in taxes, the average grocery bill did not increase and store revenue did not fall.

The World Health Organisation said in 2015 that increasing consumption of sugar-sweetened beverages "is associated with overweight and obesity in children".

Several other studies have pointed out to a relationship between sugar-sweetened drinks and long-term weight gain and cardiovascular risk.

In the UK, numerous charities, health organisations and high profile campaigners including celebrity chef Jamie Oliver have called on the government to introduce a sugar tax as part of a range of measures to combat obesity.

According to a report from Cancer Research UK and the UK Health Forum, introducing a tax on sugary drinks in the UK could prevent 3.7 million cases of obesity in the next 10 years.

Adults and young children in the UK currently consume twice the maximum recommended amount of added sugar while 11-18 year olds eat and drink three times the recommended limit. Sugary drinks are the main source of added sugar for this age group.

George Osborne announced the introduction of the tax on sugary drinks in last year’s Budget, claiming it would help curb the nation’s obesity epidemic.

But in August last year, a coalition of British businesses including British Sugar, the British Soft Drinks Association, the British Beer & Pub Association and the Federation of Wholesale Distributors teamed up to call on the government to scrap plans to introduce the tax.

The campaign argued that the tax would not solve obesity but would "push up prices for those who can least afford it", creating opportunities for import fraud and tax avoidance.

In July last year, a study by the TaxPayers’ Alliance looked at the effect that Mexico's sugar tax had on jobs and economic output. It found that if the levy had the same impact on the UK economy, it would result in 5,624 less jobs.

This would in turn lead to the Treasury missing out on more than £17m in job-related taxes, the group claimed.

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