But that scenario assumes that the market does not respond, argue Jonne Guyt, professor in the Amsterdam Business School’s Marketing section, and Arjen van Lin of Tilburg University. In a recent FD opinion piece, they point to research showing that manufacturers, supermarkets and consumers all change their behaviour in response to such taxes.

Limited effect

Dutch policy has so far focused largely on lighter measures, such as food-choice labels and voluntary agreements with producers and retailers. Although these measures can help consumers identify healthier options, evidence suggests that their effect on purchasing behaviour is limited. Voluntary product reformulation has produced only modest reductions in sugar levels.

A sugar tax would work differently because it applies across the market. It influences consumer choices through prices, while also giving food and drink manufacturers an incentive to reduce sugar in their products. Products with less sugar then face a lower tax burden and become comparatively cheaper.

Evidence from taxes on sugary drinks points to both mechanisms. Consumers may buy fewer sugary products or switch to alternatives with less sugar. At the same time, producers can adjust recipes, product ranges and prices. Experience in the United Kingdom, for example, indicates that manufacturers responded to a soft-drinks levy by reducing sugar content, which limited average price increases.

Guyt and Van Lin stress that a sugar tax is not a standalone solution to obesity and diet-related disease. They argue that it should be considered as part of a wider set of measures to support healthier diets. Its potential lies not only in a direct price incentive for consumers, but also in the market-wide changes it can trigger in products and retail offerings.