The Newfoundland and Labrador government is all set to implement the country’s first soda tax beginning September 2022. According to Finance Minister, Siobhan Coady, the new tax will see prices on drinks with added sugars increase by 20 cents per litre. This tax is expected to reap the province an additional $9 million in tax revenues and will be applied in addition to existing provincial sales tax.
The taxes will affect all beverages with added sweeteners such as sugar, fructose, corn syrup and agave nectar. Alcoholic drinks, chocolate milk, infant formula, yoghurt drinks, diet drinks with artificial sweetening, and nutritional meal replacement beverages are exempted. Alcoholic beverages are already charged higher taxes and it is believed that adding on to this will not discourage further consumption.
The purpose of the tax is to help curb an ongoing obesity crisis but critics are already finding fault with its logic. Newfoundland and Labrador currently leads the nation with the highest obesity rate of 30%, whereas the national figure is about 20%. Professor Sara Kirk of Dalhousie University said that the new tax was no guarantee that costlier soda would make for a healthier populace. She recommended making the taxes more effective by using them to increase education and boost the availability of healthier alternatives.
Food security researcher Nathan Sing also noted that many rural areas in the province were plagued by inaccessibility to safe drinking water due to boil water advisories. Cheap soda was amongst the packaged drinks that people relied on for hydration. He also highlighted the fact that the tax would disproportionately affect lower income earners.
The link between increasing the cost of soda and improved health appears to be even more tenuous. According to Statistics Canada, there has been a steep decline in soda consumption due to changing consumer preferences over the years driven by dietary concerns about obesity and high sugar intake. Soda sales were at about 86 litres per person in 2010, versus 53 litres in 2020. The Heart & Stroke foundation had claimed that introducing a soda tax would have an immediate and measurable impact on the weight and health of Canadians. Their premise however seems flawed given that as soda consumption has declined over the years, the country’s obesity rate and BMIs keep climbing.
The Financial Post’s Peter Shawn Taylor noted that though the soda tax would help the government generate more revenue, it shifted the burden of that particular tax onto low-income earners. He pointed to a 2020 study by the Economics and Human Biology academic journal that found that this demographic would pay the higher proportion of income in tax, making it regressive.
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