John Roughan: Sugar tax would poison our very good system

Advocates of sugar tax ignore the damage it would do to the tax system. Photo / 123RF

Like rust, the researchers of public health keep trying to corrode our tax system. Like rust, they never sleep. They were at it again this week, holding a "fizz" conference at Auckland University in the hope of persuading political parties to put a tax on soft drinks in their platform for the coming election.

National didn't turn up, Labour was non-committal, NZ First was waiting to see which way the wind blows. The Greens, the Maori Party and Gareth Morgan's Opportunities Party were all for it.

In fact the man from the Opportunities Party said, "Why stop there? We want a junk food tax. We want to tax saturated fats, those salts, those sugars...". Bless him, he illustrated exactly why this is not a good idea.

The Auckland District Health Board didn't turn up either. I don't know why that surprised the advocates of heath taxes. The day public servants associate themselves with campaigns for more taxation will be a sad day for their integrity. They can leave that to health and education professionals who also draw their pay from taxation but have no such qualms. They even, and always, accuse their opponents of a pecuniary interest.

An economist with a self-appointed "Taxpayers' Union" argued in the Herald on Wednesday that sugar taxes had not reduced sugar consumption in countries that have them, notably Mexico and Denmark, though he conceded they were very good at raising revenue for governments because people keep buying sweet treats regardless.

Boyd Swinburn, professor of population nutrition and global health at Auckland University, replied in yesterday's paper, calling the Taxpayers' Union "a virtual front for the sugary drinks corporate taxpayers", and citing research published last week from Edinburgh University that concluded a health tax can reduce consumption of an unhealthy product if it increases the price by 20 per cent or more.

Really? A $2 drink will not be bought at $2.40? I simply don't believe it.

Let me assure health taxers I have not been paid to say that. My only interest as a citizen of this country is in the integrity of our tax system. This is the thing health taxers never consider.

Thanks largely to GST we have one of the simplest, cleanest, fairest tax systems in the world. I don't think any tax expert disputes this. The economic benefits of a broad tax net with few exemptions or arbitrary additional imposts is immense. It helps ensure investments and resources flow to activities of most value. It is undoubtedly one of the reasons we are doing so well compared to most countries today.

We are very fortunate to have a broad-based consumption tax. If it hadn't been done in the first flush of economic reform we might have faced the same ordeal as Australia when their reformers got around to it. GST was endlessly contentious over there and they ended up with a ragged GST compared to ours.

Keeping ours clean is not easy. It is a rare election when some party or other, usually NZ First, does not promise to exempt from GST a worthy good or service such as fresh fruit and vegetables, ignoring the definitional anomalies and collection costs. Selective taxes on unhealthy things are the other side of the same coin.

Tax simplicity is not an easy principle to explain at elections but it is the real reason parties with governing experience resist calls for levies and exemptions.

We have long had selective excise on petrol, alcohol and tobacco, relics of the pre-GST era. Petrol tax can be justified since it goes into a dedicated account that covers the cost of roading. Alcohol taxes can't begin to pay all health and social costs attributed to it.

Tobacco taxes, though, have been hiked so high they undoubtedly pay their hospital bill. Tobacco kills so many of its consumers that it probably produces savings for the taxpayer in superannuation and subsidised aged care.

Tobacco taxes have risen so high in recent years that dairies are being robbed and their poor owners bludgeoned in armed robberies of cigarettes. It's madness but high taxation usually has perverse consequences. You'd thing the public health lobby would learn something from the crime their taxes are causing, but no. Their answer to the dairy attacks is tighter restrictions on outlets for cigarettes, increasing their scarcity value.

Now they would turn soft drinks into a valuable commodity. Soft drinks would be just a foot in the door, they are not a big consumer item these days. They are just the easiest sweet thing. Once it was accepted that sugar could be taxed, the principle would be applied to all sweetened products, at inordinate costs of compliance and collection for dubious benefit.

Health is important but so is the tax system. Leave it alone.