The health and economic benefits of sugar taxation and vegetables and fruit subsidy scenarios in Canada

Siyuan Liu, Arto Ohinmaa, Katerina Maximova and Paul J. Veugelers

Social Science & Medicine, 2023, vol. 329, issue C

Abstract: A tax on sugar-sweetened beverages (SSB) has been implemented in various jurisdictions. Though research confirmed this tax to reduce sugar consumption and to prevent chronic diseases, it also revealed concerns: one concern relates to the small proportion of sugar in the diet coming from SSBs; and another concern relates to the disproportional tax burden to low-income groups. To inform public health decision makers on alternatives, we examined three ‘real world’ taxation and subsidy scenarios in Canada: 1) a CAD$0.75/100 g tax on SSBs; 2) a CAD$0.75/100 g tax on free sugar in all foods; and 3) a 20% subsidy on vegetables and fruit (V&F). Using national survey data and a proportional multi-state life table-based Markov model, we simulated the changes in disability-adjusted life years, healthcare costs, tax revenue, intervention costs, and incremental cost-effectiveness ratio for five income quintiles after implementing the three scenarios, over a lifetime of the 2015 Canadian adult population. The first, second and third scenario would prevent 28,921, 262,348 and 551 cases of type 2 diabetes, respectively. They would avert 752,353, 12,167,113, and 29,447 disability-adjusted life years and save CAD$12,942 million, 149,927 million, and 442 million in health care costs, respectively, over a lifetime. Combining the second and third scenarios would lead to the largest health and economic benefits. Although the lowest income quintile would bear a higher sugar tax burden (0.81% of income, CAD$120/person/year), this would be compensated by a coinciding subsidy on V&F (1.30% of income, CAD$194/person/year). These findings support policies that include a tax on all free sugar in foods and a subsidy on V&F as an effective means to reduce chronic diseases and health care costs. Although the sugar tax was financially regressive, the V&F subsidy could compensate for the tax burden of the disadvantaged groups and improve health and economic equity.

Keywords: Fiscal policy; Sugar tax; Economic evaluation; Equity; Health promotion; Chronic disease prevention; Simulation modeling; Vegetables and fruit (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.socscimed.2023.116012

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