Implementing a Sugar-Sweetened Beverages Tax in the Northwest Territories

Using the Tax System to Encourage Healthy Choices:

Discussion Paper January 2019

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Table of Contents

Executive Summary ...... i

Résumé ...... ii

Introduction ...... 1

The Problem with Sugar: Obesity, health, and sugar consumption ...... 2

Using taxes to reduce sugary beverage consumption ...... 4

Unhealthy food taxes in other Canadian jurisdictions ...... 6

Sugar-sweetened Beverage Tax Proposal ...... 7

Considerations for Taxing Sugar-sweetened Beverages ...... 9

...... 9

What should be the Tax Rate? ...... 10 ConclusionImplementation ...... and Administrative...... Costs ...... 12

Next Steps ...... 12

Selected Bibliography ...... 14

Appendix ...... 15

Executive Summary In NWT Budget 2017-18, the Government of the Northwest Territories committed to investigate introducing a sugary drinks1 This investigation into oral health has ledtax to as the a way to reduceal to introduce sugar consumption a sugar-sweetened and improve public health. using the tax system as part of the. public health initiative to reduce obesity onand whether improve a sugar- propos beverages tax to sugarreduce-sweetened sugar consumption drinks. in the Northwest Territories This paper is to generate public discussion sweetened beverages tax would be effective in reducing the consumption of - sugar-sweetened -diet , ready to drink tea and coffee drinks, The GNWT proposes to tax sugar and sweetened beverages by applying a direct specific )tax on all beverages (non carbonated drinks and milk and yogurt s energy drinks, sports drinks fruit beverages that are not 100 per cent fruit juice at a tax rate thebased added on container sugar. size. Beverages that are 100 per cent fruit juice beverage s will be exempt from the tax because they provide other nutrients may offset the- harmsweetened created by Diet carbonated drinks are not included in the tax because the effect of diet drink on health initiativesengagement to reduce. Theobesity is inconclusive. The tax will include sugar - fountain beverages exceptare the fountain following beverages rates for mixed fountain with drinks: alcohol. The tax rates will be determined following public proposed tax rates are 5 cents per 100 millilitres (ml) for pre packaged• Less drinks than and 250 ml 10 cents • 250 ml to 500 ml 20 cents • 500 ml to 750 ml 30 cents • Over 750 ml 45 cents

The sugar- is to di , , and tooth decay. the objective of the sweetened beverage tax scourage the consumption of sugary drinks that are linked to health issues such as obesity Type. 2 diabetes Although tax will increase government revenues, the high administration required to implement this tax means thisresearch tax is not an effectives that thetax toconclusion generate thatrevenues es on sugary drinks will reduce their , make itAlthough difficult to draw conclusionssupport on how much a sugar-tax would reduce consumption, ofother sugar factors,-sweetened such as drinks substitution and therefore of other have forms an of sugar and public education . sweetened beverages tax consumption influence on reducing obesity and improving dental health

1 The technical definition of ‘s

ugary drinks’ is all beverages-18 with Budget ‘free sugars’,announced which an investigationincludes all natural of a ‘sugary sugars in fruit juices and fruit juice concentrates, honey and syrups; and, monosaccharides and disaccharides that are added- to foods and beverages.erages Although the 2017 drinks’includes tax, non the- need to balance sugar content and-to nutritional- value of certain products, the proposal is for a tax on ‘sugar sweetened bev ,’ which are defined as beverages with ‘added sugars’ and typically diet carbonated soft drinks, ready drink sweetened tea and coffee, energy drinks, sports drinks, and ‘fruit drinks’ with less than 100 per cent juice. i Résumé 2017-2018, le gouvernement des Territoires du Nord-Ouest s est sucrées2 en vue de réduire la consommationDans le cadre de de son sucre budget et d améliorer la ’ engagé à étudier la possibilité d’instaurer une taxe sur les boissons - ’ santé du public. Cette étude sur l’intégration de mesures diminfiscales au projet de santé publique destiné à freiner l’obésité- et à améliorer la santé bucco dentaire, a débouché sur la proposition d’instaurer une taxe sur les boissons édulcorées afin de uer la consommation de sucre aux Territoires du Nord Ouest. Le présent document vise à susciter un débat public pour savoir si l’instauration d’une telle taxe permettrait effectivement de limiter la consommation de boissons édulcorées. édulcorées

Le GTNO propose d’imposer une taxe directe sur les boissons (boissons %) gazeuses autres fonctionque diète, de boissons la taille prêtes à boire. à base de thé ou de café, boissons énergisantes, boissons pour sportifs, boissons à base de fruits à l’exception des jus de fruits purs à 100 à un taux calculé en les effets nocifs du sucre.du récipient Les Les jus de fruits purs à 100 % et les boissons à base de lait ou de yogourt seront exemptés de la taxe, car ils apportent d’autres nutriments qui peuvent contrecarrer boissons gazeuses diète ne sont pas concernées par la taxe étant Le donné qu’il n’a pas encore été démontré si elles pouvaient ou non réduire l’obésité. La taxe 100s’appliquera aux distributeurs de boissons édulcorées à l’exception de celles à base d’alcool. taux d’imposition sera fixé : après la consultation du public. Le taux proposé est de 5 cents pour millilitres (ml) pour les boissons préemballées. Les taux suivants s’appliquent pour les boissons• Moins en fontaine de 250 ml 10 cents • 250 à 500 ml 20 cents • 500 à 750 ml 30 cents • Plus de 750 ml 45 cents L édulcorées est d 2 et les caries. t ’objectif de la taxe sur les boissons ’en décourager la consommation pour réduire les problèmes de santé comme l’obésité, le diabète de type La mise en place de cette axe représentant une importante charge administrative, les recettes nettes revenant au gouvernement seront négligeables dans le contexte. édulcorées effectivement d en limiter la consommation, d Bien que les recherches montrent que les taxes sur de les tirer boissons des conclusions clairespermettent sur le degré efficacité ’ freiner l’autres facteurs comme les produits- dentaire.de substitution au sucre et la sensibilisation du public empêchent d’ de l’approche fiscale pour ’obésité et améliorer la santé bucco 2 La définition technique de « » « sucres », notamment les sucres naturels contenus dans les jus de fruits et les jus de fruits concentrés, le miel et monosaccharidesboissons sucréeset les disaccharidescomprend toutes les boissons contenant des libres 2017-2018, la nécessité de trouver un le sirop, ainsi que les ajoutés dans les aliments et les boissons. Même si une étude sur les boissons sucrées avait été annoncée dans le budget sucres équilibreajoutés », entrenotamment la teneur les en sucre et la valeur nutritionnelle deles certains produits nous a poussés à proposer plutôtcafé, les une taxe sur les boissonss, les édulcorées qui sont définieset commeles des boissons contenant des « de fruits %) boissons gazeuses autres que diète, boissons prêtes à boire à base de thé ou de boissons énergisante boissons pour sportifs, boissons à base de fruits à l’exception des jus purs à 100 ii

Introduction 2 , heart disease n the Northwest Territories, and consuming Obesity,of the Northwest Type diabetes Territories (GNWT) isand conducting oral health problemsengagement are serious public health issuesadded i too much sugar is part of thediscourag problem. ingThe sugar Government- . a public on whether taxing sugar in beverages will be an effective way to improve public health by sweetenedThis resultsbeverage from consumption the commitment made in NWT Budget 2017-18 to investigate introducing a sugary drink3 s that are paper , 2 . O tax as a price incentive to discourage the consumption of sugary drink diseaselinked to and health chronic issues kidney such failure.as obesity TheType discusdiabetessesand poor orals healthwith sugarbesity and and Type 2 diabetes lead to risk of other chronic disease conditions such as hypertension,- cardiovascularto encourage Northwest Territories residentspaper the problem . provides information for a public discussion on the proposed tax on sugar sweetened beverages to consume less of these products

3 The technical definition of ‘s udes all natural

ugary drinks’ is all beverages-18 with Budget ‘free sugars’,called for which an investigation incl of a ‘sugary sugars in fruitthe juices need and fruit juice concentrates, honey and syrups; and, monosaccharides and disaccharides that are added- to foods and beverages. Although the 2017 drinks’includes tax, non - to balance sugar content and-to nutritional-drink sweeten value of certain products, the proposal is for a tax on ‘sugar sweetened beverages,’ which are defined as beverages with ‘added sugars’ and typically diet carbonated soft drinks, ready ed tea and coffee, energy drinks, sports drinks, and ‘fruit drinks’ with less than 100 per cent juice. 1

The Problem with Sugar: Obesity, health, and sugar consumption

2 Obesitystrokes), is and cited some in numerous cancers. The medical health and costs health journals as a largely preventable factor a 2016 in aSenate number of chronic diseases, including Type diabetes, cardiovascular diseases (heart attacks and 4 due to obesity are considered serious; committee report estimates that obesity costs Canada between $4.6 billion and $7.1 billion annually in health care and lostorthwest productivity. Territories are a serious health . Using 2015 data, over 39 of the NWT adult (age 18 and over) is considered 30Obesity or more), rates which in the isN significantly higher than the national rateproblem of 26 . T per cent population obese (body5 mass index of per cent he prevalence of diabetes in the NWT, of which obesity is a factor, is similar to the national average. Medical studies link sugar- Sugar sweetened beverages, are the single largest dietary contributor ofs largesugar amounts and their of role calories in thatobesity accumulate rates is receiving as weight increasing gain if individuals attention. do not enough to based foods to the . increase in obesity primarily because the sugar signalin these to foods provide exercise burn off the excess calories. Too Themuch sugar sugar from beverages does not provide the the brain that enough calories are consumed (the personincrease iss full) the riskand ofso heart more disease simple sugarsand stroke are consumed than the body needs overloads the liver which turns the simple sugars into fat. This fat tends to be stored in the belly which . Too much simple sugar also increases the risk for insulin resistance and therefore creates a higher risk for Type 2 diabetes. Added sugars can also be addictive. igh sugar content and acidity to the erosion 7. Sugar- The Canadian Dental Association links beverages with h of tooth enamel, especially if consumed frequently sweetened beverages contain acids and ofsugars decay that lead to poor oral and general health. The number one reason that Northwest Territories children under the age of five are hospitalized (including day surgery) is for the surgical extraction ed teeth. Public education, preventative programs and a reduction in sugar consumption are all steps required to improve5 oral health in the territory. sugar- on children found consistent evidence of a negative sugar- A 2018 literature survey of studies published since 2006 that investigated the health effects of sweetened beverage consumptiongreat majority of the research literature s sweetenedreduction in beverage sugar- impact among research results, with the strongest support for the risk of obesity and dental caries. The upported the view that a sweetened beverage consumption would improve children’s health.

4 -of-

5 Senate of Canada, Obesity in Canada: A Whole ChronicSociety DiseaseApproach Registry for a Healthier Canada Canada, National Diabetes Surveillance System NWT Department of Health and Social Services, and Public Health Agency of 7 Junk Food and Child Health, Position Statement

Canadian Dental Association, 2

It is difficult to determine the Northwest Territories all sugar-sweetened drinks and Stroke Foundation data6, Northwest Territories residentsconsumption consume of 4.4 million litres of; however,soft drinks based annually on an (includes annual consumption diet drinks). Thisof 100 data litres does per not person include derived other fromnon- Canadian Heart n sugar such as sugar- about carbonated Thebeverages following that t contai sweetened fruit beverages.containing sugar WT school

able shows that daily consumption of soft drinks by N ageTable children 1: Student is above beverage the national consumption average. at least once per day, by grade and by gender

2014 Health Behaviour in School- – Canada & NWT

Aged Children Survey Results Grade Drink item Gender 6- 8 9-10

Canada NWT Canada NWT

Boys 9% 14% 14% 16% Soft drinks that contain sugar Girls 7% 11% 7% 13%

Diet soft drinks Boys 3% 3% 4% 3%

Girls 2% 3% 2% 2%

Boys 34% 29% 33% 21% Fruit juice Girls 35% 28% 30% 21%

Boys 2% 2% 3% 3% Energy drinks Girls 1% 2% 1% 2%

Boys 5% 12% 7% 9% Sports Drinks Girls 3% 5% 3% 2% Source: 2014 Health Behaviours in School- dataset, GNWT

Aged Children

5 - the literature”. Sarah N. Bleich et al., “The negative impact of sugar sweetened beverages on children’s health: an update of 6 Canadian Health and Stroke Foundation, Sugar, Heart Disease and Stroke, Position Statement

Using taxes to reduce sugary beverage consumption

effectively8 Studies suggest- that reducing the consumption- of calories can reduce population weight . These studies have led researchers and policymakers toOther propose jurisdictions introducing (mainly taxes at on thespecific national sugar levbased goods, especially sugar sweetened beverages, as a way to reduce consumption. of these products with no nutritional value but significant calories. The rationale forel but also a few municipalities)- have imposed sugar taxes (see Appendix) , through an , are linked to negative health consequencesimposing and the a tax rising on sugarhealthbased care costs beverages resultingis to from provide them a. marketThe same incentive rationale is usedincreased in ing price to reduce consumption of these products that because theys to raising health care costs of smoking-related illnesses. tax tobacco products to discourage smoking contribute n sugar-sweetened two ways: A tax o beverages is expected to influence consumers of the taxed beverages in • First,

the tax will reduce the consumer’s ability to buy other goods if expenditures of the • Second, t makes the sugar- relative to other taxed beverages are not reduced. s, which may encourag he tax based beverages more expensive and may product e consumers to substitute other products for the taxed beverages. The amount- of substitution depends on each consumer’s preferences result in substitution of other products that also have implications for health, such as ecent ssubstitutingtudies sugar based drinks with other sugar products such as candy. the rationale that a sugar- in the Northwest Territories health and economic R modelling the effect of taxes. These to reduce studies sugar include consumption: support sweetened beverages tax will provide benefits• by reducing sugar consumption 9 estimated that a levied at the manufacturing level ars would save 13,000 lives and 600,000 A 2017 University of Waterloo study T 2 20 perincidents cent excise of hearttax disease, and 20,000 cancer cases, overand wouldthe next 25 ye prevent obesity cases, up to 200,000 cases of ype diabetes, 60,000 • 10 of drinks and flavoured mineral watersproduce and $11.5 billion in health care savings. A 2016 University of Queensland study modelled the impact a 20 per cent tax on soft for the health care system. found that over 25 years the tax would save 1,600 lives, prevent 4,400 heart attacks and 1,100 stokes, and provide savings of A$609 million

8 -222.

9 Tatiana Andreyeva et al., “The Impact of Food Prices on Consumption”, 216 10 Amanda C. Jones et al., "The Health and Economic Impact- Sweetenedof a Tax on BeveragesSugary Drinks on Health in Canada." and Health Care

Lennert J. Veerman et al., “The Impact of a Tax on Sugar Costs: A Modelling Study." 4

• 11 20 and 40 rates on sugary drinks. The study A 2016 University of York study compared the effects of unhealthierper cent cereals tax and sugaryshopper soft drinkspurchases, while of unhealthiera breakfast cereals and determinedsweetened drinks. that a 40P per cent tax reduced purchases of both 20 per cent tax significantly reducedmaking cereal sales butaware not of areurchases of both products declined by one half if shoppers knew they were being taxed by 20 per cent, showing the benefit of shoppers how much tax they paying. 12 concludes that is , since there are Onvigorous the other accounts hand, ofa studythe e by Oxford Economics. establishinghe sugar taxes for health objectives “highly speculative” - very few studies that provide complete and xpected impacts According to this study, t success of sugar taxesy to reduce consumption depends on the pass through rate of the tax, how responsive people are to theprice increase, how much consumers substitute the taxed unhealthy food for other equall unhealthy food that is not taxed, and whether the introduction of the tax creates increased trans border purchases. studies evaluating the effectiveness of Information from an analysis Sinceof 160 most studies sugary13 drink taxes are relatively recent and use different methods for implementation, negative 0.13 to - the taxes over time are limited. on will for major food categories indicate that the price elasticity of soda pop ranges from - 1.77, which means that for every 10 per cent increase in price, consumpti decrease between 1.3 per cent and 18 per cent. For convenience, analysts tend to take a midpoint of 0.8. However, a range this large shows how difficult it is to measure how effective a tax would be to reduce consumption. , and this

Taxes on products may also change thesugar behaviour-sweetened of the companies selling the product - corporate behaviour should be considered when assessing the potential efficiency of reducing sugar consumption through a tax on beverages. Companies producingThese sugar based beverages are likely to offer incentives to discount thetax’scalorie ability drinks, to influencewhich have consumers no by nutritionallowering prices value. to absorb some or all of the tax and increasing promotion activities. companies may also focus their efforts on selling untaxed no

11 cereals and soft drinks”. Daniel John Zizzo et al., “The impact of taxation and signposting on diet: an online field study with breakfast 12 - International Tax and Investment Centre. Oxford Economics. “The Impact of Selective Food and Non Alcoholic Beverage Taxes”. 13 -222.

Tatiana Andreyeva et al., “The Impact of Food Prices on Consumption”, 216 5

Unhealthy food taxes in other Canadian jurisdictions While t - “junk” food, the sugar-sweetened would make the Northwest Territories the he federal government and some provinces use sales taxes to tax sugar based drinks and retail sale volume.proposed beverage tax first jurisdiction in Canada to impose a type of sugary drink tax on certain products based on the , l G ST) (HST) Soft drinks, candy, and snack food (for example potato chips) are currently taxed under, while the other federa foodsoods in and grocery Services and Tax drug (G storesand the harmonized provincial sales taxes of Ontario, on Quebec,soft drinksNewfoundland, candy and & Labrador, snack foods New in Brunswick,stores. Saskatchewan Prince Edward and Island, and Nova Scotia , sweets, and snack food from theirare not taxed. Manitobaes applies its provincial sales tax Canadian British Columbia exempt soft drinks provincial sales tax . Alberta and the three territories do not Tablehave provincial/terri 2: Federal/Provincial/Territorialtorial sales taxes. Sales Tax Ratessales tax rates are shown in Table 2.

NL PE NS NB QC ON MB SK AB BC NU NT YK

GST ------5% 5% 5% 5% 5% 5% 5%

PST ------8% 6% - 7% - - -

HST 15% 15% 15% 15% 14.975% 13% ------

Sales tax on soft drinks, candy and Yes Yes Yes Yes Yes Yes Yes No No No No No No snacks

some studies indicate may reduce their effectiveness as a . The retail Sales taxes are levied on the retailmay price, also which largerprice containers signal to to discourage consumption because consumers are less aware of the tax price change due to the sales tax encourage substitution to cheaper sugary drinks or to reduce the cost per volume. -16, the Northwest Territories Drop the Pop Promotional programs can also have a role in reducing soft drink consumption.The Canadian In Beve 2015rage Campaign completed its tenth year encouraging school children created Balanced Choices NWT14 s Northwestand their families Territories to eat residents healthy food and drink healthy beverages. Association a public education campaign called , which provide with information on identifying low and no calorie options.

14 Balanced Choices NWT https://balancecalories.ca/balanced-choices-nwt/

Canadian Beverage Association 6

Sugar-sweetened Beverage Tax Proposal The GNWT - ing on all:

• proposessugar-sweetenedto tax sugar (nonsweetened-diet) beverages by apply a direct specific tax • ready-to-drink sweetened tea and coffee carbonated drinks; • energy drinks ; • and ; • sugar-sweetened fruit that contain less than 100 sports drinks; rate beverages . per cent fruit juice.

The tax will be determined“sugary based drinks on” container size . her nutrition that is in the Northwest Territories The proposed tax is not a tax because it excludesugar- 100 per cent fruit juicesuch100 as per flavouredcent fruit juicesdairy andprovide non -otdairy milk especially importantalso have other nutritional value and are where freshfrom fruit the is difficult to obtain. at affordable prices. S sweetened beverages and drinkable yogurt Theexcluded eproposed tax

tax will includ fountain beverages except fountain beverages mixed with alcohol served in bars and restaurants. The tax exemption for the beverages mixed with alcohol is because it would be administratively difficultfor sugar to tax-sweetened these drinks drinks directly. sold in containers 100 millilitres

The proposedthe followingtax rate rates sizes areis 5 cents per The (ml) of product. Fountain drinks vary in size depending on the establishment and for administrative6. simplicity tax based on a range of container proposed in Table 3. proposedTable 3: Proposed tax rate Fountainis based onDrink a recommendation Tax Rates from the Canadian Heart and Stroke Foundation

Container size Tax rate (ml) (per container) Less than 250 10¢

250 - 500 20¢

500 - 750 30¢

Over 750 45¢

- whyFor the t proposed tax to meetnon -thediet health objective to reduce sugar consumption by Northwest Territories residents, it needs to apply to as many sugar sweetened beverages as possible, which is he tax applies to all carbonated drinks and fruit beverages.

6 Canadian Health and Stroke Foundation, Sugar, Heart Disease and Stroke, Position Statement

- switch to alternatives such as sweetened fruit juice. sugarA tax only-sweetened on sugar based carbonated beveragesartificially will-sweetened fail to reduce sugar consumptionwith noif consumers nutritional value to avoid The health implications- if individuals substitute avoid this carbonated drinks, there for is not enoug carbonated drinks reasonsthe tax are unknown. Although taxing no calorie carbonated drinks to consumerssubstitution faced with is an option - h available evidence to justifyThe hea taxinglth diet beverages for health andl health, it could if consumers be seen as beingswitch a to discriminatory non- sources tax on of diabetic sugar such as candy or junk food, area a paucity consider ofation sugar. free drink options other than water. implications, especially for ora taxed Sugar-

sweetened beverages cannot be taxed at the manufacturer level because the Northwested to Territories does not have the legal authority to impose indirect taxes. The tax would have to be applied at the retail level similar to a sales tax. Vendors of taxable products would be requir collect the tax from their customers and remit the tax to the GNWT. Vendors include distributors, wholesalers, retailers, vending machine operators, and restaurant operators. Caterers that offer free beverages as part of a package and airline operators offering free inflight beverages would be deemed to purchase the products for their own consumption and would therefore be subject to the Ftax.ountain drinks are created and injecting it with

at the point of sale by adding syrup to water storescarbon, suchdioxid ase. convenience Since the imposition stores and of grocerya tax on storesthe syrup in smaller would communitbe an indirecties, selltax, sugara direct-sweetened tax on thedrinks final in consumer containers will and be through applied soda based fountains on a range of cup sizes. Many food establishments and fountain drinks . Although administration will be complex, taxing reducebottled sugardrinks- without taxing would create a tax distortion and encourage substitution to the less taxed item, which would defeat the objective of introducing the tax to sweetened beverage consumption. to reduce landfill waste. The sugar-sweetened . TheHowever, GNWT if already the sugar has-sweetened a bottle deposit program beveragealso reducetax landfill will not waste eliminate and the the revenues bottle deposit of non program- since it serves a separate purpose refunds. beverage tax is successful at reducing drink consumption, it will profit organizations that benefit from bottle

Considerations for Taxing Sugar-sweetened Beverages

What should be the Tax Rate? Studies suggest that a sugary drink high if

tax rate must be it is to change consumer behaviour.

In general, the efficiency in reducing sugar consumption will depend on. the sensitivity of the consumer to the price change and how the consumer’s behaviour changes as a result (absolute decrease in sugar consumption4 or substitute for different sugar foods) e 0.8 to negative For the analysis in Table15. , the price signal (price elasticity) chosen ranges from negativ 1.0 per cent so that every ten per cent increase in price will reduce consumption between eight and ten per cent , and have Soft drinks have different prices across the Northwest Territories4 because of transportationincrease costs. The different prices play a role in determining the tax rate implications for the price effect in different regions. For example, using the assumptions in Table , the 22 per cent price and consumption decrease of 18 to 22 per cent estimated for Yellowknife would represent about an 8 per cent price increase in Norman Wells and a drop in consumption of between 6 and 8 per cent.

15 -Sweetened Beverages”.

Kelly D. Brownell et al, “The Public Health and Economic Benefits of Taxing Sugar 9

Table 4: Implications of Sugar-sweetened Beverage Price Elasticity of -0.8 to -1 on 5 cent per litre tax in Yellowknife on various products

GST, Refundable Price Consumption Consumption Yellowknife Total retail 5 cent per Product deposit and increase decrease -0.8 decrease -1 Grocery Price price 100 mL tax Container from tax price elasticity price elasticity recycling fee 355 ml pop $0.58 $0.21 $0.79 $0.18 22% -18% -22% 222 ml pop $0.50 $0.21 $0.88 $0.11 13% -10% -13% 237 ml bottle $0.83 $0.22 $0.88 $0.12 13% -11% -13% 2 L pop $1.99 $0.45 $2.42 $1.00 41% -33% -41%

Table 5: Implications of Sugar-sweetened Beverage Price Elasticity of -0.8 to -1 on 5 cent per litre tax in Norman Wells on various products

GST, Refundable Price Consumption Consumption Norman Wells Total retail 5 cent per Product deposit and increase decrease -0.8 decrease -1 Grocery Price price 100 mL tax Container from tax price elasticity price elasticity recycling fee 355 ml pop $2.55 $0.21 $2.76 $0.18 6% -5% -6%

would generate 6 million, if the is assumed to Based on -0.8 to The- proposed sugar sweetened drinks tax intax large revenue centres of aboutand $2. theprice more increase rural communities, notthe change consumption.reduc e sugarprice sweetened elasticity drink ranging from 1 per cent5and and tax 18 induced price and the increases estimated of 22 perrevenue cent generated would declineabout 6toper cent in 2.1 2 million proposed. tax would consumption between 1 per cent tax between $Implementationmillion and $2. and Administrativeper year Costs to understand and easy

The tax system should be simple for compliance. Complex legislation may Mostbe necessary Northwest but Territories taxpayer compliance should be simple. - term Northwest Territories retailers of sugary drinks receive their productsThe for GNWT sale canfrom use two long legislation to require wholesalerbeverages distributors that employ approximately-of-territory,40 to collectto 50 employees, the sugar- dependingsweetened on the season. Large retailers have their own. This supply system systems. is used to collect the Northwest Territories /distributors, whether in or out sales to beverage tax on behalf of the government . This system works well tobacco tax: the tax is collected at the wholesale level by tobacco distributors. This on co - retailers, who then pass the tax on to consumers- at the retail level o other jurisdictionbecause in allCanada provinces has a taxsugar tobacco- and are willing to enforce compliance. on each other’s behalf operation will not be available for the sugar sweetened drinks tax because n based drinks tax other than sales taxes 10

arge retailers

Under- the proposed system, l ry to avoidmay administrative choose to become costs tax, collectors themselvesy are not and using collect the tax fromcash registertheir consumerss. However, at theall point of sale. Small vendors may choose to pay thew taxould upincurfront additional when buying administrative their invento costs especially iffiling the s. computerizedC businesses that distribute or sell taxedengagement beverages is relating to tax remittances and tax return restaurants,omputerized caterers, cash registers and take will- need to be changed to record the tax and more required with business to determine how to administer the tax through small retailers and The sugar-sweetened out establishments. sugar- arebeverage tax willmany be administratively more difficult than tobacco tax more administration. For the because sugar-sweetenedunlike tobacco taxes, which affect a relatively in influencing small number the decision of customers, to based drinks consumedincluded by in thepeople, retail makingat thetax shelfadministration since consumers for businesses complext have already madebeverage the tax to be effective. purchase, the tax needs to be price paying for heir purchases decision to buy

Conclusion Northwest Territories than Canada and is growing at a faster rate. Research shows that the obesity rate is higher ’s rate

, the Minister of Finance committed in NWT Budget 2017-18 to investigateIn response introducing to the link between a sugary sugar consumption and health issues such as obesity and diabetes and to improve oral health - drinks tax. However, considerations about the balance between engagementhealth risks and nutrition lead to a proposal, and other for a stakeholders sugar sweetened beverage tax that would exclude sugar100 per- cent fruit juices and flavoured dairy drinks. This discussion paper serves as the basis for. There is not enoughwith the information public, business to conclude that the reductionon of the sugar value- of implementing a sweetened beverage tax to reduce sugar consumption and therefore obesity and diabetes sweetened beverages will Manyimprove studies oral health. that - sugar-sweetened drinks, reduce support the hypothesis that introducing taxes on specific sugar based goods, especially -sweetened will help the consumption of productsdded, that whether have significant calories but no nutritional value and be effective in reducing obesity rates. The objective- of the proposed sugar beverage tax on most beverages with sugar a purchased in containers or as fountain drinks in the Northwest Territories is to reduce sugar Ifsweetened beveragehe Northwest consumption. Territories sugar-sweetened its effectiveness in reducimplemented,ing sugar-sweetened t . long-term scientificbeverage evaluation tax should w beould evaluated require for the collection of meeting the objectives of reducing obesity levels and improving oral health by drink consumption A Next Stepsbaseline data before the tax is implemented. Northwest Territories residents and stakeholders on a on sugar-sweetened The next step is to hear from , and tooth decay how best to implement tax beverages to reduce consumption in an effort to reduce health problems• such as obesity, diabetessugar-sweetened , especially:

Do you support taxing beverages to reduce consumption in an effort to • sugar-sweetened sugar- reducesweetened health problems such as obesity, diabetes and tooth decay? Do you think that a beverage tax will reduce your consumption of • think that a sugar-sweetened - drinks? Do you beverage tax may cause you to substitute sugar • In general, do you think that a sugar-sweetened sweetened drinks for diet drinks? of sugar-sweetened beverage tax will reduce the consumption • under the Northwest Territories sugar drinks? : What types of beverages should be taxed propose o sugar-sweetened drinks (non- drinks taxreadyto reduce-to- sugar consumption uit Current proposal to tax diet carbonated soft drinks, drink sweetened tea and coffee, energy drinks, sports drinks, and ‘fr

) and chocolate milk. drinks’ with less than 100 per cent juice . This tax excludes 100 per cent fruit juice o (sugar-sweetened or artificially-sweetened) only. Sugar-- only. o All carbonated drinks o sweetened dairy and non- dairy milkssweetened). carbonated drinks All sugary drinks (current proposal plus fruit juices and o None – . • sugar-sweetened of the above disagree with taxing beverages What tax rate would encourage you to reduce your consumption of

drinks?o 10 to 25 o Approximately 10 per cent of the price,

o per cent of the price, o sugar-sweetened drinks. 25 to 50 per cent of the price, No tax rate will keep me from drinking

Selected Bibliography

AmericanAndreyeva, Journal Tatiana, of PublicMichael Health W. Long, 100, and no. Kelly2 (2010): D. Brownell. 216-222."The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food." Bleich, Sarah N. and Vercammen, “ - ”, B . Kelsey A. The negative impact of suger sweetened beverages on children’s health: an update of the literature MC Obesity 5:6 (2018) - Brownell, Kelly D., Thomas Farley, Walter-1605. C. Willett, Barry M. Popkin, Frank J. Chaloupka, Joseph W. Thompson, and David S. Ludwig. "The Public Health and Economic Benefits of Taxing Sugar

Sweetened Beverages." (2009): 1599Balanced Choices NWT, https://balancecalories.ca/balanced-choices- nwt/ Canadian Beverage Association, sociation, Junk Food and Child Health, Position Statement -

Canadian Dental As http://www.cda adc.ca/_files/position_statements/junkFoodAndChildHealth.pdf August 2007 Dobbs, Richard, Corinne Sawers, Frazer Thompson, James Manyika, Jonathan Woetzel, Peter Child, Sorcha McKenna, Angela Spatharou, “Overcoming Obesity: An Initial Economic Analysis” McKinsey Heart and Stroke Foundation of Can , Global Institute, November 2014. http://www.heartandstroke.ca/-/media/pdf-files/canada/2017-position-statements/sugar-ps-eng.ashx ada, Sugar, Heart Disease and Stroke, Position Statement, 2017 Freeman, John, Matthew King, Pamela Briand and Will Picket, “Health and Health- - ” Related Behaviors Among Young People in the Northwest Territories: Health Behaviors in School Aged Children, avid Queen’s University, Public Health Agency of Canada and Health Canada, November 2012. Heart & Stroke Institute (2017). Jones, Amanda C., J. Lennert Veerman, and D Hammond. "The Health and Economic Impact of a Tax on Sugary Drinks in Canada." Chronic Disease Registry of Canada, National Diabetes Surveillance System. NWT Department of Health and Social Services, and Public Health Agency - International Tax and Investment Centre, 2016. Oxford Economics. “The Impact of Selective Food and Non Alcoholic Beverage Taxes”. Senate of Canada Obesity in Canada: A Whole-of-Society Approach for a Healthier Canada March 2016, https://sencanada.ca/content/sen/committee/421/SOCI/Reports/2016-02- , Report of 25_Revised_report_Obesity_in_Canada_e.pdfthe Standing Senate Committee on Social Affairs, Science and Technology, Canadian Community Health Survey. Statistics Canada. Veerman, J. Lennert Statistics Canada. Health Statistics Division. Sugar- PloS one 11, no. 4 (2016): e0151460. , Gary Sacks, Nicole Antonopoulos, and Jane Martin. "The Impact of a Tax on Sweetened Beverages on Health and Health Care Costs: A Modelling Study." Forwood, and Marc Suhrcke. The impact of taxation and signposting on diet: an online field study with breakfast cereals and soft drinks. Zizzo, Daniel John, Melanie Parravano, Ryota Nakamura, Suzanna

No. 131cherp. Centre for Health Economics, University of York, 2016.

Appendix International Experience with Sugar Sweetened Beverages Taxes • Since the 1950s, several juris Norway, Finland) – and sugar ) – dictions have implemented (e.g. enerate revenues • sometimesSince 2010 repealed (e.g. Denmarkransition, Finland to a in 2017 for confectionary but notsugar sweetened beverages taxes: on soft drinks and confectionery to g there has been a t public health rationale to justify o Hungary (2011), , Belgium (2016), Ireland sweetened(2018) beverages taxes (2018), Portugal (2017) (2018), Sri Lanka (2017), Thailand (2017), France (2012), Chile (2014), (2017) Mexico, United (2014) Kingdom (2018) , Philippines , South Africa o (2017), Boulder (2017), Seattle (2018), and California cities Berkeley (2015), UnitedSan Francisco Arab Emirates (2017), Oakland (2017), and (2017) • US Cities: Philadelphia . Albany A 2016 World Health Organization (WHO) report states that sweetened beverages taxes Tax Model“help reduce consumption and prevent obesity” • - content Most jurisdictionsUS citieshave )implemented an excise, volume based tax model based on sugar • (Excise duties on producers/importers in France, Finland, UK, Hungary but on • distributorsUsually a in Usually collected upstream to minimize administration and business compliance costs Tax Base pplied at the national level • all drinks) and generally include concentrates, such as fountain drinks to reduce the Most taxes include sweetened beverages (e.g.. pop, fruit drinks, iced teas, energy drinks, • and sports- Norway,potential Portugal) for substitution and increase revenues • FruitArtificially juices sweetenedand milk- beverages (e.g. diet beverages) sometimes included (e.g. France, (e.g. Norway) • based beverages are generally exempted, or imposed at lower ratee) • Does not include alcoholic beverages or products sweetened at point of sale (e.g. coffe Effect onSome Consumption jurisdictions exempt small producers (e.g. UK, Finland) •

Few assessments have been made on the effectiveness of sweetened beverages taxes in o Several of these mea rimarily to generate revenues, giving reducing consumption • Many sures were implemented p effectivenesslittle incentive difficult to toassess determine their impact. on obesity • Long-termsweetened effects beverages are uncertaintaxes have been implemented recently, making: their o s fell but some positive effects-incomehave been households, seen and sales of Sugary drink purchase 10 per cent during the first two years of the Mexican tax, with an average decline of 14.3 per cent among low o sales had declined 10 cent bottled water increased cent one 16 year per aftercent inBerkeley 2014; , California Sweetened beverages per and bottled water sales had increased 16 per ’s sweetened beverages tax implementation. 15