B.C. Budget 2020: Sugary drinks to cost more
Credit to Author: David Carrigg| Date: Wed, 19 Feb 2020 02:06:41 +0000
The B.C. government expects to rake in an extra $30 million a year by applying the Provincial Sales Tax to carbonated sugary drinks, it was revealed in Tuesday’s budget.
The government claims the move was driven by efforts to improve the health of young British Columbians.
According to the government, PST will be expanded on July 1 to include sweetened carbonated beverages at a rate of seven per cent. So a $2 can of pop from a vending machine will jump 14 cents.
“Research tells us that the biggest consumers of pop are teenagers between the age of 14-18, with consumption of pop declining with age,” the government said. “The consumption of these beverages increases health care costs for the province.”
The government said the move was in response to repeated recommendations from a “wide range of experts,” including health professionals, the MSP Task Force and the multi-party Select Standing Committee on Finance and Government.
Currently, any carbonated beverage that contains sugar, natural sweeteners or artificial sweeteners is tax exempt because it is considered a “food product for human consumption.” The Canada Food Guide does not recommend consuming most beverages affected by the tax.
As of July 1, the PST will apply to all beverages dispensed through soda fountains, soda guns and similar equipment, along with all beverages dispensed through vending machines (with exception of water and coffee dispensers.)
Canada’s obesity rate has doubled since 1978 and is projected to be 34 per cent of the population by 2025. That statistic is reflected across the globe, and in the past few years several countries — including Hungary, Mexico and France — and some U.S. cities have introduced a sugar tax in a bid to help lower obesity rates.
According to a Canadian Taxpayers Federation report from Nov. 2017, these sugar taxes have failed for a number of reasons; demand for sugary drink is inelastic (it changes very little when prices rise) so impacts lower income people, consumers shop for pop in other jurisdictions or switch to other types of sugary drink, sugar drink taxes in the U.S., Mexico, France, Hungary and Denmark showed no discernible improvements in obesity rates and sugar drink taxes are considered among the least cost-effective and least-efficient obesity interventions.
“Despite aggressive and urgent demands made by public health lobby groups, the preponderance of evidence shows food and drink taxes have no discernible impact on obesity,” concluded the author of “Sweet Nothing. Real-world Evidence of Food and Drink Taxes and their Effect on Obesity.”
Canadian sugary drink data from 2004 to 2015 showed a 27 per cent drop in sales of regular pop like Coke, and a 22 per cent drop in fruit drink sales. However, that same period saw enormous jumps in sales of energy drinks. Sales of drinkable yogurt and flavoured milk also rose, but they are not subject to the B.C.’s government’s tax.
A Jan. 2017 report from the University of Waterloo (Ontario) called “The Health and Economic Impact of a Tax on Sugary Drinks in Canada” concluded “sugary drink consumption has a substantial negative impact in Canada and a sugary drink tax is expected to mitigate some of this burden.” The report claimed a 20 per cent tax on all sugary drinks would postpone 13,206 deaths over a 25 year period.