Italy to slap on a plastics and sugar tax

As Italy joins UK, Ireland, South Africa, Mexico, UAE, Canada, France with a sugar tax, it's defies belief that Australia is still genuflecting to producers

Amid cries of 'foul play' from producers (at least they know what they are talking about), Italy has announced they will be taxing plastic and sugar in their 2020 budget. The Italian proposal has plenty of evidence based precedents with 30 other countries having already introduced a sugar tax. The specific quantum of the sugar tax is unclear, but at least one company, Sibeg, which bottles and markets Coca-Cola in the Sicilian city of Catania, estimates the levies will reduce its revenues by 27% to €84 million and cut profits by €16.7 million.

Plastic manufacturers will pay a bounty of €1 per kilogram of plastic produced. When you add those to taxes together, if you are a plastic bottle soda swigger in Italy, you are about to make a few decisions.

The interesting thing about all media reports on the subject is that they focus on the amount of money it will rake in to assist the ailing Italian government. With that kind of reporting, it's starting to seem that every evil has a silver lining. The upside of the plastic and sugar pandemics is that they are the ultimate taxable target because they are the ultimate revenue money pit for a hungry tax man.

Any sugary drinks or plastics manufacturer with a scenario planning board knows that a tax like this is just the beginning. If you ever wondered why bottlers in Australia lobby so hard to derail sugar taxes, there is your evidence right there. Just look what happened to cigarettes once pesky health groups and government put their sticky snouts into the revenue trough.

It all started out as a small tax on bax - and never ended. A packet of Winfield 25s cost $7.35 in 2000 and now costs $33.95. During that period, the percentage of people who smoke dropped from 25% to 13%. Are you getting the idea? Here's a graph of a stick price of a cigarette that might clarify further.

While the revenue bonanza is true, the reality of course, in the case of both plastic and sugar, is way more insidious for producers (and way more excellent for health and the planet) as the knock on effects of the tax is significant.

Let's take a look at sugar for starters. It doesn't matter what argument you hear to the contrary, like the government not wanting to be responsible for 'lifting the grocery bill for Australian families', that's not it. Any government who would refuse to discuss the opportunity for a minimum $500m tax windfall or even something as far fetched as improving national health for free has another agenda.

At the risk of taking you on one more tangent, sugar is like coal. We produce the stuff and so the government problem with sugar, especially in Queensland, is what to do with the sugar we make if the appetite for it drops. That affects both farmers and jobs. 16,000 of them. Someone might have to actually plan for alternative exports or uses for sugar.

While on one hand, finding alternative sales for sugar cane is a government problem, at the same time soda producers are cosying up with a pile of bribes (donations) to avoid the tax on bax scenario. What happens if a sugar tax is implemented? Well, bear in mind that the sugary soda industry is somewhat larger and more complex than tobacco, but the principals are the same and it's not rocket science:

• Taxes increase the costs of sugar products, thereby reducing sales
• Reduced sales means less consumers are affected by sugar. In the same way as less smokers meant less dead or sick people from lung cancer and related diseases, less sugar means less obese people and related diseases like diabetes.
• Consumers might even buy healthier alternative - like fresh fruit. (Too much?)
• As the number of sick and fat people drop, inversely, the actual evidence of the impacts piles up
• As the knock on cost becomes clearer (and the size of the revenue pile), governments have an all out reason to tax even more. Health groups have evidence to point to and ask for levies. And on it goes. Pretty soon that $1 soda is $10.  

Meanwhile in Italy, there is nothing quite like the end of the line to encourage innovation. And it turns out that a cash strapped government will spend a bit more time extrapolating all real costs as well as potential revenue opportunities and alternative income models to solve a problem once they have an eye on the prize. Like climate change the true beneficiaries of all the alternatives eventually become clear and as more countries adopt sugar taxes, the evidence will be undeniable.

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