Top Aust'n policy institute recommends "sugar tax" on sweetened drinks

Australia should introduce a "sugar tax" on sweetened drink, a report by one of the nation's most respected policy institutes said.

The report, released by Melbourne's Grattan Institute on Wednesday, recommended the implementation of an excise tax of 30 US cents for every 100 grams of sugar in a beverage as part of the fight against obesity.

Hal Swerissen and Stephen Duckett, the co-authors of the report, said the tax would apply to non-alcoholic water-based beverages that contain added sugar and would raise 370 million US dollars per year.

Economic modelling included in the report suggested that it would also prompt a 15 per cent reduction in the consumption of sugary drinks as people switched to water and other drinks not affected by the tax.

"We recognise that a tax on sugary drinks is not a silver bulletsolution to the obesity epidemic - that would require numerous interventions at an individual and population-wide level," the report said.

"But it will address these third-party costs of obesity by reducing sugar intake from sugar-sweetened beverages."

The Grattan Institute estimated that approximately 10 per cent of Australia's obesity could be attributed to the sugary beverages.

"But it is important to reduce the consumption of sugar-sweetened beverages because most contain no nutritional benefit, they are consumed heavily by children, and Australia's added-sugar intake is already high," the report said.

"Consumers could easily avoid the tax by switching to healthier drinks, such as water or artificially-sweetened beverages."

The report suggested that people eat more unhealthy food than they would if the costs of obesity were incorporated into the price of their food.

"This suggests food with excessive calories and poor nutritional value are underpriced," it said.

"This results in higher health and welfare costs than otherwise and a cost transfer from obese people to non-obese taxpayers."

Michael Gannon, head of the Australian Medical Association (AMA), in November strongly recommended a sugar tax be introduced.

Consultancy firm Pricewaterhouse Coopers (PwC) in 2012 estimated that obesity was costing Australia 6.3 billion US dollars through medical bills and lost productivity. Endit