Sugary drink tax could raise billions: Parliamentary Budget Office

UPDATED*

A 20% tax on sugar-filled drinks would raise $1.4 billion in just two years, according to new figures.
 
The data, released by the Parliamentary Budget Office (PBO), comes at a time when sugar-sweetened beverage sales are expected to total $4.4 billion by 2026 and grow by 2% annually.
 
The modelled tax would cover soft drinks, cordial, energy drinks, sports drinks, fruit drinks, and flavoured mineral waters, and is based on the levy beginning in July 2025.
 
The renewed push comes as Australians consume more than 2.4 billion litres of sugary drinks each year, with an average 375 ml can of soft drink including up to 50 g of sugar, around 12 teaspoons.
 
Almost half of all children in 2017 consumed sugar sweetened beverages every day, and one in six teenage boys consume at least 52 litres of soft drink each year.
 
Dr Terri-Lynne South, a GP dietitian and Chair of RACGP Specific Interests Obesity, supports the introduction of a sugar tax, saying it provides both health and monetary benefits.
 
‘It’s a little bit of a carrot and a stick scenario – it raises revenue which can then be put back into the community from a health promotion point of view,’ she told newsGP.
 
‘These drinks potentially worsen dental caries, they push out more nutritious food, and they are non-nutritious calories which contribute to energy balance and early obesity.’
 
In Australia, research estimates a 20% health levy could result in 16,000 fewer cases of type 2 diabetes, 4400 fewer cases of heart disease, and 1100 fewer cases of stroke over 25 years.
 
Separate research found consuming 340 ml of sugary drink a day increases a person’s risk of type 2 diabetes by 22% when compared to drinking one can a month or less.
 
Dr South said in her practice, the discussion around high-sugar drinks often comes up with parents unaware of these risks.
 
‘Some child health checks can lead to talking about juice, particularly in the under-twos, and we can talk about not having any juice in any bottles as well as limiting sugar sweetened beverages, particularly in the under-fives,’ she said.
 
‘Another way it comes through is in consults about poor energy, poor growth, and investigating iron deficiencies, and a common cause in that under-five group is not getting enough dietary iron in.
 
‘Parents want to do the best by their children, and GPs can be tactful and use that motivation to say, “we don’t need to drink sugar-sweetened beverages for sporting reasons for energy”, for example.’
 
Last month, Diabetes Australia’s State of the Nation 2024 report listed the introduction of the 20% levy as its number one screening and prevention recommendation.
 
The peak body pointed to an ‘unrelenting diabetes epidemic’ unfolding nationally with young people being diagnosed at ‘alarming rates’.
 
Additionally, it revealed Aboriginal and Torres Strait Islander communities face the world’s highest rates of youth-onset type 2 diabetes, with its prevalence in those aged 15–24 doubling in five years.
 
In a bid to reverse this unwanted trend, Diabetes Australia is calling for the revenue raised from a future sugar-sweetened beverage tax to be reinvested into public education campaigns and initiatives to prevent chronic disease and address childhood obesity.
 
Across the world, 85 countries already have health levies in place – in Mexico, it led to a 37% reduction in the number of sugar-sweetened beverages purchased.
 
However, Dr South said in some areas of disadvantage, caveats must be made, such as when healthier options are unaffordable or unavailable.
 
‘I don’t think we want the cost of these drinks to be passed on to the people that are going to be most disadvantaged from a socioeconomic point of view,’ she said.
 
‘We need to be mindful that the role of these foods and drinks in the different socioeconomic remote areas can be a little bit different.’
 
The PBO analysis also investigated a proposal to limit the advertising of ‘unhealthy foods’, specifically cakes and biscuits, fast foods, chocolate and sweets, processed meat, and snacks.
 
It considered seven different options, including banning the marketing of unhealthy foods on radio, television, print and social media entirely at a cost of around $46 million over two years.
 
The cheapest option examined was banning the marketing of unhealthy foods in print only, which would cost about $2 million.

*This article has been updated to reflect that the PBO estimates covered a two-year period, not three.
 
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