The potential health effects of taxing sugary drinks in Estonia

Background: Sugary drinks are widely consumed in Estonia and around the world, and have been associated with overweight and obesity and a wide range of chronic diseases. The World Health Organization recommends that adults and children restrict free sugars to less than 10% (and preferably less than 5%) of total daily energy intake but a large proportion of the population consumes more than that, much of which is consumed as sugary drinks. Taxing sugary drinks has been proposed as an effective measure to reduce sugar consumption, improve health and raise revenue.

Methods: This study investigates the potential impact of taxation on soft drinks on the health of Estonians, and on government revenue. Using established modelling methods and Estonian data supplemented with international data, the following scenarios were assessed:
Scenario 1: Flat rate tax of €0.20 per litre on all soft drinks (including those with artificial sweeteners).
Scenario 2: Two-tiered tax with soft drinks with sugar content 5-7.9 g per 100 ml and products with sweeteners taxed €0.20 per litre, and soft drinks with sugar content over 8 g per 100 ml, and products that contain both sugar and sweeteners, taxed €0.40 per litre.
Scenario 3: Combination tax with soft drinks with artificial sweeteners but no added sugars taxed €0.20 per litre, soft drinks with added sugar with sugar content 5-7.9 g per 100 ml taxed €0.30 per litre, and soft drinks with artificial sweetener and sugar, and those with sugar content over 8g per 100 ml, taxed
€0.50 per litre.
Scenario 4 (added later to the analysis and therefore not all of the details are published in this report): Two-tiered tax with low tax rates for soft drinks with sugar content 5-7.9 g per 100 ml and products with sweeteners taxed €0.10 per litre, and soft drinks with sugar content over 8 g per 100 ml, and products that contain both sugar and sweeteners, taxed €0.30 per litre.

Results: All four variants of the soft drinks tax lead to net health benefits that accrue over the lifetime of the population. A flat tax of €0.20 per litre (scenario 1) is expected to prevent approximately 1026 cases of obesity in men and 546 in women, mostly within the first year. Over the first 25 years, this tax could prevent 1228 cases of diabetes, 161 cases of heart disease, and 77 cases of stroke, for an overall benefit of 2,787 health-adjusted life years (HALYs) over the lifetime of the current population of Estonia. Tax revenue is estimated at €17 million per year. The effect of the two-tiered tax (scenario 2) is about 75% greater than that of the flat tax, the combination tax (scenario 3) has twice that impact, and two-tiered tax with low tax rates (scenario 4) is about 33% greater than that of the flat tax.

Conclusion: Taxing a broad range of soft drinks can lead to substantial health benefits, as part of a broader package of interventions to reduce the burden attributable to excess sugar consumption and obesity.