An own goal for Morgan Foundation

Geoff Simmons at the Gareth Morgan Foundation has a triumphant post declaring:

Last year the Taxpayers Union launched a research report claiming that a tax on sugar-sweetened beverages wouldn’t have any impact. Apparently they had some numbers to back up that claim, although they didn’t make the data behind them public. That was not a good move.

Amidst a blaze of publicity they quizzed those that advocated for a soft drink tax whether they would reverse their stance in the face of this evidence.

It was a bold initiative.  Especially given that it turns out they were wrong; either their analysis, data or both were incorrect. Not only has peer-reviewed research been published showing that the Mexican tax is working …

In light of this consensus of support for the corrective tax will the Taxpayers Union now retract their findings or will they cling to their unsubstantiated findings in the face of the evidence? At the very least they need to release their own evidence so it can be critiqued. They do after all promote themselves as a research house rather than an advocacy group. As we all know advocacy groups have a predilection of not letting the evidence get in the way of the ideology.

I think Mr Simmons may be describing his own foundation.

The aim of a sugar tax is to reduce obesity. There is absolutely no evidence at all that any sugar tax anywhere has reduced obesity. This is because people substitute and there are numerous sources of calories.

It is possible that if you tax a specific product, that sales of that product will reduce. The higher the tax, the more impact there will be. But that is only about sales of that product – an output, rather than the desired outcome – a reduction in obesity.

But has the Mexico sugar tax actually reduced sales? Or has it failed to even do that? I wonder whether Mr Simmons has read the entire research report.

You see Katherine Rich points out in this article that the Popkin paper relies on reported data from respondents, not actual sales data. So this entire paper is based on people saying they think they are now drinking less. It is far from robust, despite peer review.

So what has the actual sales data told us in Mexico?

Well the tax collected is an excellent proxy for the sales data. And in 2014 the tax brought in 18.3 billion pesos. And in 11 months of 2015 it has brought in 19.5 billions pesos – so sales appear to be increasing not decreasing.

But even if there was a modest decrease, this may not be causative. Rich makes the point that carbonated drinks sales in NZ fell 4.4% in the last year – and with no sugar tax. Just changing consumer demand.

So overall the argument by the Morgan Foundation is seriously lacking.

UPDATE: The paper cited relied on both reported data from respondents and audits of their receipts and household refuse. However this in no way impacts my conclusion that this is a less robust measurement than the amount of tax collected by the Government which shows sales increasing.

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