Tax on fizzy drinks will damage the economy

Nobody is advocating children living solely off fizzy drinks but that does not make this a matter for government interference, says think-tank

A new report has been published today, which calls for the introduction of a sugary drinks duty in the United Kingdom as part of the 2013 budget. The move is intended to be a vehicle to combat diet-related illness in children. While we should not dismiss the importance of protecting young peoples' health, this draconian proposal not only lacks evidence - it also lacks a sense of fairness.

The British government should learn lessons from Denmark, where a 'fat tax' was recently abandoned speedily because of its adverse economic, social and political effects - and the associated absence of health benefits. Although it was intended to hit products such as sweets and crisps, in practice it pushed up the prices of meat and dairy products; leading Danes to flock to German supermarkets across the border to escape the punitive taxes.

Moreover, the only western country to have taxed soft drinks for any length of time is the United States where the sky-high obesity rates bear witness to the ineffectiveness of these sort of measures. The negligible effect on health such a duty would have is also well documented. Research suggests that a 10 per cent tax on fizzy drinks would reduce the amount of calories people consume per day by just three calories. Indeed, the average person gets just 2 per cent of their calories from sugary drinks. These are extremely trivial numbers with an even more trivial effect on obesity.

As Britain looks down the barrel of a triple-dip recession, a campaign to increase the prices of everyday products emphasises how out of touch these single-issue pressure groups are. With wages stagnating and the cost of living becoming an increasing burden on ordinary peoples' lives, it is impossible to justify tax hikes. This £1bn tax grab would affect ordinary people and disproportionately hit the poorest who are struggling to make ends meet.

Even if we are to ignore the staggering lack of evidence in terms of health and economics, as well as the proposal's unfairness, a tax on sugary drinks is still left wanting. Governments often assure people that the proceeds of stealth taxes - estimated at £1bn in this instance - will be ring-fenced for certain projects. In reality, this almost never happens. Much of the money will be absorbed by the bureaucracy of setting up a new quango which, once established, would in turn be saddled with the headache of deciding what is unhealthy and what should be taxed.

The government must realise that intrusive measures like this are unnecessary. Nobody is advocating children living solely off fizzy drinks but that does not make this a matter for government interference. The British Health Secretary Jeremy Hunt, fortunately, seems to understand the importance of individual choice. The problem with a proposal such as this one is that the tax will either be too low to have any effect on health or too high to be politically palatable. The evidence supports this. Ineffective, invasive and imbalanced - a fizzy drinks tax is a step too far.

Stephanie Lis is communications officer at the British-based Institute of Economic Affairs think-tank