Sugar tax could save as much as 16 billion euros

November 22, 2023

A simulation study conducted by a team from the Technical University of Munich (TUM) demonstrates that a soft drink tax in Germany would have significant positive effects. Therefore, we simulated the effects of the most common international taxation strategies for the time period from 2023 to 2043,” says Michael Laxy. Existing soft drink taxes can be roughly classified in one of two groups. In the United Kingdom, for example, companies have to pay levies tiered according to the volume of sugar in their soft drink formulas. In Mexico, however, the tax is added to all soft drinks independent from their sugar content.

A simulation study conducted by a team from the Technical University of Munich (TUM) demonstrates that a soft drink tax in Germany would have significant positive effects. In all of the simulated variants evaluated, less sugar was consumed and the rate of illness dropped. This would be a way to reduce costs to the national economy and alleviate the burden on the health care system. There is, however, a difference between taxes aimed at reducing soft drink consumption and taxes aimed at bringing about changes in product formulation.

Sugary beverages increase the risk of obesity and illnesses such as diabetes. Several countries have therefore introduced taxes on soft drinks. In Germany there has been a voluntary commitment on the part of the beverage industry to reduce the sugar content of soft drinks since 2018. In early 2023, a study with the participation of Michael Laxy, Professor of Public Health and Prevention at TUM, showed that the impacts fall significantly short of the expected effects.

A team led by Michael Laxy and the University of Liverpool’s Chris Kypridemos has now reported its calculations on the effects of introducing a tax in Germany. The study is published  in "PLOS Medicine". “We were interested in both the short-term and long-term consequences. Therefore, we simulated the effects of the most common international taxation strategies for the time period from 2023 to 2043,” says Michael Laxy. Existing soft drink taxes can be roughly classified in one of two groups. In the United Kingdom, for example, companies have to pay levies tiered according to the volume of sugar in their soft drink formulas. In Mexico, however, the tax is added to all soft drinks independent from their sugar content. The results from international studies show that the latter variant primarily leads to a reduction in the demand for soft drinks, while the first variant is also associated with a change in formulas, meaning less sugar in soft drinks.