The Impact Of The Sugar Tax Implementation Into New Zealand

The majority is not fully aware of the impact of their consumption and decisions might have on themselves later in life. This is because individuals are not having enough information about their private costs and benefits.

Main arguments that might come across when trying to introduce the sugar tax into New Zealand is that high sugar drinks and food bring out external costs which are the cause of market failure. In result, we will end up having to pay for the consequences. In regards, the extra pressure from the Health Minister David Clark who deals with treating the symptoms of diabetes type II and the cost of tooth decay amongst younger children and market failure does explain one or more forms of interventions. High sugar foods are a cause of information failure and that people lack the full awareness and the understanding of what the real costs and benefits might be if they continue to consume high sugar drinks and also foods. Putting a tax on sugary beverages will raise extra revenues, and this could be hypothecated to be used to fund healthy projects. For example, some of the money from the sugar tax being in place has hypothecated for extra funding for primary school’s sports or health education programs. The revenue from the sugar tax could be estimated to between sixty-five and one hundred million a year from 2018 onwards.

A tax that is productive in alter consumption behaviour will ultimately lower the expected tax revenues, but that’s a welcomed trade-off because the tax is having an impact. Reasons why the NZG maybe against the sugar tax because a tax on sugary drinks could have an aggressive adverse effect on lower-income households who spend a higher amount of their income on sugary products, this will result to them having less income to spend on nutritious food and drinks. This again will mainly affect our Maori and Pacific, families.

The tax itself may not be beneficial; it shouldn’t rely on taxes and the loan the cuts consumption. Some economist has argued that if you tax sugary drinks that rational people will switch to other sugary alternatives to get their daily sugar fix. The drink industry itself including manufacturers and retailers have argued that the tax on sugary drinks is arbitrary. If drinks have to be tax why not chocolate bars, breakfast cereals, and other sugar products and processed foods. There’s also a risk there could be lots of lost jobs, thousands of jobs in bars and shops that rely on these sales to keep afloat.

There are quite a lot of important arguments against the sugar taxes. Price elasticity of demand will consumers change their behaviour if the price of a litre of a high sugary drink increase by 40 cents for example and people will switch from high sugary drinks to diet versions or zero sugar products. As a result, the cross-price elasticity comes in as well.