Similar to many other areas of the world Ireland is facing unprecedented levels of obesity [1,2]. Recent examinations indicate that between 21-23% of the Irish population are obese, with another 35-37% being overweight [3,4]. Obesity is linked a wide range of non-communicable diseases (NCDs) including cancer and osteoarthritis, as well as diabetes and cardiovascular disease [5]. Sugar intake is linked to obesity [6-8], as well as dental health [9,10]. In response to this growing epidemic of obesity the Irish Government announced the forthcoming introduction of a sugar levy in its 2016 Obesity Policy And Action Plan [11].
A Sugar Sweetened Drinks Tax (SSDT), or Sugar Tax, as it is more commonly termed is a classic example of what is often termed a ‘sin tax’. Such taxes are often charged on commodities deemed harmful to society, such as tobacco, alcohol, gambling and pornography [12]. Ireland introduced its SSDT in May 2018 [13]. This date was delayed somewhat to coincide with a similar tax being introduced in the UK. This was done to ameliorate the concerns of retailers in the border region of Ireland who felt this tax might help drive away potential customers north of the border and into Northern Ireland [14]. The scope of the Irish SSDT was subsequently expanded on 1 January 2019 via the Finance Act 2018 to include certain plant protein drinks and drinks containing milk fats [15].
The SSDT in Ireland is relatively modest. It is a tiered excise duty comprised of three rates based on sugar content [16]. Soft drinks under 5g of sugar per 100ml incur no tax, while those with 5g to under 8g of sugar per 100ml incur a tax which equates to 5 cents on a standard 330ml can. The higher rate of SSDT is for those soft drinks over 8g of sugar or more per 100ml and incurs a SSDT of 8 cents per 330ml can [15].
The WHO recently noted that some form of SSDT, or sugar-sweetened beverage tax (SSBT) as they term it, has been introduced into 108 countries to date [17]. The WHO, and allied groups, are strongly supportive of SSBTs as a cost effective fiscal lever in efforts to control rising levels of obesity globally [18,19]. The WHO state that SSDTs ‘represent a win-win-win strategy: a win for public health (and averted healthcare costs), a win for government revenue, and a win for health equity’ [17].
From a demand perspective an SSBT may work through three mechanisms. In the first instance an SSBT should make sugar sweetened drinks more expensive, and therefore less appealing and accessible. The second mechanism through which a SSBT may act as a disincentive is informed by rational choice theory and suggests that causing the sugar sweetened drink to be more expensive than its no or low sugar alternative will cause people to opt for the cheaper alternative. Additionally, the higher price may act as a signal to a potential purchaser and remind them of the negatives associated with such a purchase.
All three of these mechanisms are reliant on two key factors. In the first instance most or all of the SSDT must be passed on to the customer to pay, rather than this cost being absorbed by the manufacturer or retailer [20,21]. Secondly, zero or low sugar options must remain cheaper than higher sugar drinks that are subject to the SSDT. If for example a retailer opts to increase the price of a 330ml can of Full sugar Coke by 8 cents, as per the SSDT, while at the same time also increasing the price of an equivalent can of Diet Coke by the same amount, then two of these potential dissuasive mechanisms cannot function.
Industry is routinely fiercely resistant to the introduction of health oriented taxes, such as SSDTs [22-24], and Ireland is no exception [25-27]. However, a clear understanding of standard industry tactics to delay, deny, and deflect the need for regulation and associated evidence can help overcome such opposition [28, 22]. The SSDT in Ireland has been criticised for a lack of hypothecation, that is a lack of ring fencing of monies raised to support and improve services, in this case such as dental, diabetes, cardiovascular or obesity related health care [29,30]. The Irish SSDT May also be critiqued for its modest tariff, and lack of being annually adjusted for inflation [17,18]. Branded soft drinks sold individually routinely retail for between €1.50 and €2.75 for 330ml - 500ml cans and bottles in supermarkets, garages and corner shops. Prices in hospitality venues may be up to 50% or more dearer. As such an SSDT component in the price structure of five to eight cents per 330ml can is minimal. Finally, the Irish SSDT has been critiqued for the reality that despite the accolades the Irish Government received for this pro-Public Health measure, it was only introduced in Ireland after European Union restructuring effectively closed down the Irish sugar beet industry, thus eradicating potential opposition from Ireland’s powerful farming lobby [31].
There is substantial evidence to suggest that one of the major outcomes of the introduction of an SSDT rather than its direct impact on consumers may instead be seen among manufacturers. Reformulation of the ingredients of many soft drinks by industry to avoid SSDT thresholds is clearly evident in Ireland and elsewhere [32-44]. Many countries, such as Ireland have introduced policies and targets to promote healthier reformulation of food and drink products [32,33].
Globally research has noted considerable variation in the price pass-through rate of SSDTs. Evidence suggests the rates can vary from 40% to well over 100% [45-57]. A recent examination of the SSDT pass-through rate in retail (off-site) premises in Ireland noted that the tax was routinely not passed on to the consumer [30]. In this examination of 14 chain supermarkets it was noted that in instances where the same leading brand and size of container was available in both sugar free and full sugar versions, in approximately 60% of cases the retail price was the same. Even when a price differential was applied it often fell short of the SSDT addition [30]. However, one limitation of this research was its sole focus on the retail, or off-trade, sector to the exclusion of the hospitality sector. This research aimed to remedy this lacuna by examining SSDT pass-through rates in the hospitality (on-site) sector.