Proposed Sugar And Salt Tax Has The Capacity To Do More Harm Than Intended Good

Following the publication (yesterday) of an independent report on England’s National Food Strategy led by businessman Henry Dimbleby and endorsed by Jamie Oliver, the main recommendations of which were for a sugar and salt tax to be imposed, to combat obesity, Mark J Lumsdon-Taylor, senior corporate consultant at MHA, says the recommendations are a blunt instrument to a complex problem:

“A sugar and salt tax to combat obesity may be a fine idea in principle but needs very careful forethought to ensure it does not go wrong. When imposing a tax intended to change behaviour you need to know who will end up paying it. It seems unlikely price rises will be passed onto consumers because of how competitive grocery retail is. This means if a sugar and salt tax is intended to directly change consumer behaviour it is likely to fail. These are primary ingredients in the food chain.

“The report’s authors are banking on the tax changing the behaviour of food producers. This did happen in part following the introduction of the soft drinks levy in 2018 when producers responded with a lot of recipe innovations. The trouble here is the recommendations look very draconian and are liable to drive manufacturers and producers out of business before actually driving reforms.

“For example, the price a large food processor is charged per kilo of sugar is 50 pence. The report proposes a £3 tax per kilo: a 600% price increase in direct costs. If this cost cannot be passed on, which we have good reason think it cannot be, businesses and sectors will vanish overnight, and the end result will be unemployment not reformed consumer habits.

“There are other major problems with the recommendations. Imported manufactured products may not be subject to the sugar and salt taxes, especially given the kind of free trade deals the UK is aiming to strike overseas. This means these products will still be cheap and available to the consumer.

“In short, while tackling obesity is a laudable goal, a sugar and salt probably can’t directly impact consumer behaviour but could force food processors under if not handled with great care.”