In March of 2016, Nature.com published a news article titled “Sugar tax could sweeten a market failure”. In this article it was reported that the Chancellor of the Exchequer in the United Kingdom, George Osborne, announced that the UK government would introduce a levy on manufacturers of sugary drinks. The levy is being implemented to combat the multiple negative externalities of drinks with high sugar content, the costs of which are not factored into the manufacturing cost to the producer. The move was inspired by a similar tax on sugary drinks set by the Mexican government, with results showing a significant reduction in consumption. The proposed tax in the UK and the current tax in Mexico would differ in the aspect of who incurs the tax. …show more content…
With the global rise in consumption of sugary drinks such as Coca-Cola, there has been an increase of medical conditions such as heart disease, tooth decay, obesity and type-2 diabetes in the Australian population. This has created a negative externality for society, as treatment for these conditions quite often relies upon public resources. Use of public hospitals, medical centres and subsidised medical treatments and services such as the National Diabetes Services Scheme (NDSS) by those affected by these sugary drinks create avoidable social costs, paid for by Australian citizens in the form of …show more content…
Studies conducted by the American Society for Nutrition and the American Academy of Neurology found that people who consumed diet soft drinks were infact still at a high risk of developing type-2 diabetes, and also found that people who consumed diet soft drinks over regular ones were more like to develop depression over a 10 year period. If artificial sweeteners in drinks continue to show negative health effects like these over time, governments such as the UK and Mexico may need to consider taxing the use of these sweeteners in drinks to lower the associated health effects. If this were to happen, the soft drink industry would be in serious trouble. Despite this, the mutual beneficial outcome for both society and the soft drink industry is why the UK has adopted this strategy to regulate the soft drink industry and fix the negative externality they