Canadian Manufacturing

Canadian government considered taxing soft drinks

The finance ministry commissioned an internal document outlining how other governments have introduced various taxes on similar products


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Workers at a Brampton, Ont., Coca-Cola bottling plant approved a new three-year deal by a vote of 83 per cent, ending a three-week strike. PHOTO Coca-Cola

In 2014, Mexico introduced a tax on sweetened beverages of eight cents a litre. PHOTO Coca-Cola

OTTAWA—Federal Finance Minister Bill Morneau’s office requested an internal analysis last winter to examine the potential impacts of introducing a tax on soft drinks.

A January briefing note listed several jurisdictions that have tried to reduce the consumption of sugary and fat-filled foods and drinks. It said other governments have introduced various taxes and other plans on these unhealthy products “with differing results.”

Here’s how the Finance Department outlined some international examples:

• Denmark: In 2012, the Danish government repealed its 15-month old “fat tax” and announced it would ditch a sugar-tax proposal amid concerns it would have a negative financial impact on low-income earners. Products that contained more than 2.3 per cent saturated fat were taxed at a rate of about $3.30 per kilogram of fat. In 2013, Denmark also repealed its decades-old levy on soft drinks, which was about 40 cents a litre.

• Mexico: In 2014, Mexico introduced a tax on sweetened beverages of eight cents a litre and another on “junk food” of eight per cent for products containing more than 275 calories per 100 grams. Morneau’s memo said initial reports suggested soft-drink purchases have fallen by about 10 per cent since the tax was imposed. It noted, however, that it could take years to determine the effectiveness of the tax. The document also said there’s no information on whether consumers turned to other high-caloric products as substitutes.

• Berkeley, Calif.: Last year, the city introduced a tax of about 33 cents a litre on drinks with added sugar, such as soda pop, juices, energy drinks and iced teas. Morneau’s briefing note said early evidence suggests that the tax has only been partly passed on to consumers through retail prices _ thus limiting its effect on discouraging people from buying these drinks.

• New York City: Morneau’s document also highlighted a non-tax plan to limit consumption. In 2013, the city sought to impose a 16-ounce size limit on bottled and fountain drinks sold at places like restaurants, corner stores, sports venues and movie theatres. The memo said the ban never came into effect because it was overturned by the courts. Even an attempt to re-introduce the ban in 2014 failed after a court ruled the city had “exceeded the scope of its regulatory authority,” the memo said.


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