Incentivising reformulation: Tiered sugar tax in Germany could save up to €16bn in societal costs over next 20 years

The study, published in the journal PLOS Medicine, ​suggests that a flat rate tax on sugar-sweetened beverages in Germany could prevent or postpone cases of type 2 diabetes, extend healthy lifespans and save up to €9.6bn ($10.5bn) over the next 20 years.

But a tiered tax that encourages reformulation could save up to €16bn ($17.4bn).

Germany does not have a tax on sugar-sweetened beverages: but the findings from the study from the Technical University of Munich echoes research from the UK and South Africa – which have had sugar taxes for the last five years – that suggest the most important effect of these taxes has been the impact on reformulation.

Designing a tax on sugar-sweetened beverages

The World Health Organization recommends governments worldwide lessen the social and economic burden of cardio-metabolic disease by taxing sugar-sweetened beverages.​

However, the design of such taxes vary. Some reduce consumption by increasing the price: such as in Mexico where a one peso per liter tax is added to all soft drinks, independent of their sugar content.

Others, such as the tiered tax structure in the UK, incentivise companies to reformulate in order to benefit from a levy-free or lower-levy threshold.

Led by Karl Emmert-Fees, researchers at the Technical University of Munich hypothesised how these two scenarios would play out in Germany: comparing a 20% tax on sugar-sweetened beverages and a tiered tax similar to that of the UK.

In each case, they estimated changes in sugar consumption, weight, associated medical and societal costs. They also looked at the risk of type 2 diabetes, heart disease and stroke.