Coalition clash over sugar tax: Sweet danger

It was actually already a done deal that Germany would soon also have a tax on sugary drinks. That was probably in question at some point: According to media reports, the Chancellery had stopped the plans of Vice Chancellor and Finance Minister Lars Klingbeil (SPD). A government spokesman denied this on Friday and spoke of normal voting. In any case, there is a serious coalition clash. And that sends the wrong signal.

Because: Our society needs to desugar itself - or more precisely, de-sweeten. The problem with both sugary sodas and their zero versions: We are used to a sweetness that is harmful to us. Even though it should be clear, it should be said again: Science agrees that excessive sugar consumption is linked to numerous diet-related diseases. Such as type 2 diabetes, obesity and cardiovascular diseases.

The finance commission set up by the federal government to stabilize statutory health insurance companies (GKV) has calculated how the sugary diet puts a financial burden on the health system. If a sugar tax were to be implemented based on the British model, the Commission assumes, for example, that around 1,600 to 12,000 cases of diabetes would be avoided or delayed per year. However, the latter seems small compared to the approximately 1,000 new diabetes diagnoses every day.

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Nevertheless, healthcare costs for the general public would fall: The Commission assumes an average annual savings potential of around 20 to 170 million euros in the statutory health insurance system.

One of the key questions: How is it implemented?

Even if the coalition is now arguing about whether the tax is coming: the government coalition has passed a corresponding resolution for a law. The key question is what exactly this tax will look like.

Germany can look to the world for role models. The World Health Organization has been recommending sugar taxes for years, and more than 100 countries already have them. England is often cited as a positive example, as is the case by the Finance Commission.

There has been a corresponding tax there since 2018. The amount of sugar used in the drink is taxed on a staggered basis. Above all, this means that companies have an incentive to change their recipes. Less sugar, less taxes.

In fact, the introduction of this “health tax” had the effect that sugar-sweetened sodas used up to 35.4 percent less sugar. At the same time, the sweetener content of the recipes increased by 4 percent. But sweetener is significantly sweeter than sugar. To ensure that the “missing” sweetness is not simply produced differently, a corresponding tax – such as in France – should also be extended to sweeteners. Only then will the goal of lemonade being less sweet overall be achieved.

Even if it is a tax for manufacturers, companies will probably also pass on the increased costs to consumers. In England there was a sharp price increase on the day the sugar tax came into force. The pass-on rate – i.e. the costs that companies pass on to consumers – was 204 percent at the time. This means that companies are even taking advantage of the tax to make additional profit.

The state should therefore ensure that the price increase cannot be passed on excessively to consumers. Nevertheless, limos will probably become more expensive. This is certainly difficult to pay for some people, but the sweet lemonade is not necessary food. On the contrary: inflation can help reduce excessive sugar consumption.

The next question is: What happens to tax revenue? In England, to use the example, the relevant law stipulates that the revenue is earmarked for children's health and anti-obesity measures. Such use for health promotion must definitely be included in the German equivalent.

This was missed with the two comparable taxes on tobacco and alcohol – also consumer goods that are harmful to health. Most recently, this led to the debate about whether cigarettes were subject to higher taxes in order to finance the fuel discount.

The World Health Organization and medical experts rave about the positive effects of a sugar tax, citing many studies. So why has it been so difficult for her in Germany so far? The answer is simple: the sugar lobby. For example, the two associations, the Sugar Economic Association and the Sugar Industry Association.

When it became clear that a tax would also be introduced in this country, she brought out the big guns. For example, a tearjerker campaign by Nordzucker, which used AI-generated images to warn that pensioners will soon no longer be able to afford sugar cubes for their Frisian tea. This is propaganda and just shows that such a tax could actually achieve something.

In the past, the federal government tended to take a cozy approach to the food industry. Most recently, people have made a voluntary commitment to reducing sugar, even though this has proven to lead to little change. Instead of acknowledging this, the Ministry of Agriculture embellished the numbers a little.

Meanwhile, Südzucker's annual report is pleased that a stricter proposal at EU level was able to be toned down. “No specific regulatory or fiscal measures were adopted,” the report concludes. The national debate about the sugar tax was also followed and “company-relevant positions were continually introduced into the political decision-making and consultation processes – both directly and through industry and interest groups”.

How successful they were will become clear when the coalition can agree on a draft law.