First-of-its-kind Canadian ‘sugar tax’ shows some signs of effectiveness, but repeal already set

A comprehensive analysis of Canada’s first per-litre sugar tax shows signs of effectiveness, but the study comes too late to catch the eyes of decision makers who’ve already ruled on the tax’s abolition.

Newfoundland and Labrador’s sugar-sweetened beverages tax reduced the weighted likelihood of consumption of targeted beverages by about 25 per cent, according to an analysis sponsored by the Heart and Stroke foundation.

But the tax is set to be fully repealed on July 1. Its abolition was one of the first acts of Premier John Hogan, who took office in May. He said it was contributing to affordability issues in the province.

“We’re disappointed because we didn’t see any evidence that there was meaningful evaluation done at the government level,” said study co-author Scott Harding, an associate professor of nutritional biochemistry at Memorial University in St. John’s.

“We would have liked them to maybe hold off, until they at least saw our data.”

The study’s analysis of sales data in Atlantic Canada showed per-capita sales of targeted products decreased about 11.6 per cent in Newfoundland and Labrador, compared to 6.7 per cent in other Atlantic provinces.

Sales of bottled water increased, and more Newfoundlanders and Labradorians switched to diet or sugar-free sodas than residents of other provinces.

“These are the types of swings in behaviour in the population that we were hoping to see,” Harding said. “But to do it over just two years, it’s too short of a time period. And you need to change that.”

Harding said his ideal tax would be bigger and broader, with fewer carve outs for things like chocolate milk and smoothies, which were excluded in Newfoundland and Labrador’s tax.

The tax was introduced in September 2022. It added a 20 cent per litre surcharge on certain sugary drinks, like sodas, in an effort to urge people to switch to alternatives.

The sugar sweetened beverage tax was the first of it’s kind in Canada — a direct tax on soda and other products, charged by the litre.

In 2021, British Columbia instituted a similar system by removing provincial sales tax exemptions from soda and other beverages, while keeping the exemptions for bottled water and certain fruit juices.

Both provinces created similar incentives for consumers, although Newfoundland and Labrador’s approach ensures the tax is charged identically across all targeted beverages.

Newfoundland and Labrador’s Department of Finance, which administered the tax in the province, didn’t respond to additional questions or an interview request from CTV News, instead pointing to previous statements on the subject.

The tax was deeply unpopular in the province and quickly became the topic of political attack by opposition parties in the House of Assembly.

“People don’t like being told what to do, especially when it comes to something that they’ve been eating or drinking all their life,” said Tina Hann, a St. John’s resident that sits on a panel of people with experience in poverty and food insecurity.

She, like many others in the city, said she believes the tax was unfair. Hann said it made life harder for parents, as the tax was applied to some fruit juices and powdered drink mixes.

Sara Schimp, a coffee shop worker in downtown St. John’s, said she regularly heard complaints about the tax while on shift, even though neither she nor her business could do anything about it.

“I think it kind of proved that Newfoundlanders actually will pay the extra couple of cents for their sugary drinks.”

Harding said Newfoundland and Labrador’s provincial sugar tax could still be a model for other jurisdictions, but urged any other politicians watching the tax’s progress to take a different approach.

“Give it some time to work,” he said. “Shoot for success, don’t just shoot for public opinion.”