The Labour Government was warned earlier this year that removing GST from fruit and vegetables may not make them more affordable.
Documents obtained under the Official Information Act for RNZ’s series Off the Shelf: The Quiet Struggle to Stop us Eating Ourselves Sick show health officials are investigating using the tax system to combat obesity.
Ministry of Health documents say there is growing international evidence to support a tax on sugary drinks but that taking GST off food might not work in New Zealand.
The Labour Party says if re-elected it would exempt fruit and vegetables from GST at a cost of about $500 million a year.
In April, ministers received advice, signed off by Deputy Director General of Health Andrew Old, saying the high price of healthy food and the low price of junk food was contributing to a “substantial risk to food security”.
“Vegetables and fruit and other core foods are unaffordable for many families while unhealthy foods and drinks are often heavily discounted.”
The advice says governments around the world are increasingly using the tax system, or fiscal measures, to intervene.
“There is growing international evidence on the impact of different fiscal measures to reduce the affordability of unhealthy food options (eg, a sugar sweetened beverage levy) and to increase the affordability of healthy options (eg, removing tax on vegetables and fruit).”
Andrew Old, the head of the Public Health Agency, signed off the advice to ministers. Photo: RNZ / Angus Dreaver
But the advice warns that taking GST off fruit and vegetables might not work in New Zealand.
“International evidence about fiscal measures has to be carefully interpreted when considering application to New Zealand, since the New Zealand tax system has no pass through mechanism from a change in tax to a change in the price of specific goods,” the advice says.
“GST is based on a business’s total revenue not on the revenue associated with a particular product. So removing GST off vegetables and fruits would not result in a direct decrease in price.”
More from this series:
Return of the sugar tax
The documents obtained by RNZ show that a sugar tax is back on the agenda for health officials looking to combat obesity.
A briefing prepared for ministers in June says the Ministry of Health is now reviewing the evidence for a sugar tax after it was rejected in 2017.
“As of 2017, the evidence that sugar taxes improve health was weak. Over the last 5 years, more than 45 countries have implemented or continued to use sugar taxes, warranting renewed consideration of the issue based on up-to-date evidence.”
A Ministry of Health document titled 'Obesity Work Programme', sent to Associate Minister of Health Barbara Edmonds in June, said taxing sugary drinks was now mainstream policy.
“Internationally, taxes on the sugar content of sugar sweetened beverages are in place in a number of countries. This can encourage manufacturers to reduce the sugar content in their beverages to minimise tax payable.”
Minister of Health Ayesha Verrall said sugar taxes were not on her agenda.
“That's not part of Labour's tax plan and it won't be one we implement,” she told RNZ. “I think there is a challenge between the types of proposals that come up from the public health sector to regulate unhealthy food and drink and the reality of people's lives in terms of the cost of living crisis and the way in which food is culturally embedded in our community.”
Sugar-sweetened beverages are taxed in many countries - but not New Zealand. Photo: RNZ
Professor Boyd Swinburn, co-chair of the Health Coalition Aotearoa and an international expert on obesity, said New Zealand was now lagging behind.
“Half the world's population has a sugary drinks tax on it. The evidence has been piling up and piling up on its level of impact,” he said. “It's now obvious that the impact of the sugary drinks tax is that it will almost immediately reduce consumption and it’ll reduce the amount of sugar that the manufacturers put in their products.”
The World Health Organisation (WHO) reported last year that 85 of its 194 member states, or 44 per cent, taxed sugar-sweetened beverages.
The UK’s Soft Drinks Industry Levy has been in force since 2018 and is set at about 38 cents (NZD) a litre on drinks with between 5g and 8g of sugar and about 50 cents per litre on drinks with 8g of sugar or more.
The tax has seen more than 45,000 tonnes of sugar removed from soft drinks and Cambridge University research shows it may have prevented 5000 obesity cases among 10-11 year old girls.
According to the International Network for Food and Obesity, about 75 percent of drinks on sale in New Zealand supermarkets would be liable for the UK soft drinks industry levy.
National's health spokesman Shane Reti Photo: RNZ / Angus Dreaver
National 'open' to sugar tax idea
National’s health spokesperson Shane Reti said a sugary drinks tax was not National Party policy but he remained open to exploring it.
“We have watched with quite a bit of interest the UK sugar levy,” Reti said, when asked about the issue during an election campaign debate on the management of diabetes, hosted by Diabetes New Zealand in September.
“That has been kind of interesting. The fears of industry that they were going to fall over from the sugar tax - well, that didn't happen,” he said.
“It remains not our policy today but we are mindful of what's happening in the international environment.”
Asked if that meant he was open to considering a sugar tax in the future he said: “We want to follow the international science in this space.”
Food lobbyists are pushing against the tax. In a written submission to the WHO in February the Food and Grocery Council (FGC) not only opposed the tax but questioned whether sugary drinks were even linked to obesity.
“The relationship between the consumption of sugar sweetened beverages and obesity is weak. As a result, the focus on sugar is over-emphasised and often over-simplified.”
The FGC said there was “insufficient evidence to judge whether consumers are substituting other sources of sugar or calories in the face of taxes on sugar in drinks”.
In an interview with RNZ, chief executive Raewyn Bleakley softened the FGC’s line, saying she accepted sugary drinks were “contributing” to obesity but questioned whether tax was the best way to combat this.
The New Zealand Beverage Council, which represents Coca-Cola and the other big soft drink companies, pledged to reduce sugar content by 20 per cent by 2025 and Bleakley said they were on track to achieve this.
“I know that one in every two drinks [sold] that are Coca Cola are now sugar free or low sugar. So the movement is happening.”