Newspaper article International New York Times

British Tax Could Spur Drink Innovation ; Tiered Plan Could Push Companies to Develop Low-Sugar Alternatives

Newspaper article International New York Times

British Tax Could Spur Drink Innovation ; Tiered Plan Could Push Companies to Develop Low-Sugar Alternatives

Article excerpt

Instead of taxing all sugary drinks the same, Britain proposed a three-tiered formula that could push companies to develop new lower- sugar options.

Public health advocates who push for taxes on soda say any reduction in sugary drinks can help fight obesity, diabetes and tooth decay. Yet most soda taxes treat all sugary drinks as if they have the same amount of sugar.

That's the structure of Mexico's soda tax, which went into effect in 2014 and is being closely watched by researchers. It's also a feature of the soda tax in Berkeley, Calif., the first American city to pass one. Those taxes apply a surcharge on every liter or ounce of sugary drink, no matter how much sugar it has.

A new soda tax in Britain, expected to become law, is different.

The British tax won't treat a full-calorie soda and a lightly sweetened iced tea in the same way. Instead, it imposes its tax in three brackets. Sugar-free and low-sugar products -- those with less than three teaspoons of sugar for a 12-ounce can -- are not subject to any additional tax. Products with between three and five teaspoons, approximately, will pay a lower tax of around 9 cents per can. Products like a standard cola, with more than nine teaspoons in a can, will pay more, about 12 cents. The result is a slightly more complicated tax structure, but one that might provide some incentives for beverage makers to offer healthier products.

Donald Marron, an institute fellow at the Urban Institute who studies tax policy, said the tiered prices might steer price- sensitive customers from high-sugar drinks to lower-sugar ones. But he thinks its bigger effect could be encouraging companies to develop innovative drinks for the lower-tax category.

"If there are small changes they can make to get under the threshold without really affecting mouth-feel and taste, they may well do that," he said. In a recent blog post, he hailed the British idea as a "better soda tax."

Mr. Marron makes his own midcalorie products, he said, by mixing diet and regular sodas at soda fountains. But big soda companies have begun experimenting with more professional versions of this idea. …

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