Health Officials Surprised by Liberals’ Sugar Tax, Emails Reveal

Despite claims of “significant consultation” with Minister John Haggie and Health officials, internal communications show Provincial Nutritionist scrambling to justify controversial SSB tax following budget speech

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Provincial health officials were not prepared for the Liberals’ announcement of a sugar-sweetened beverage (SSB) tax when Finance Minister Siobhan Coady unveiled the government’s 2021 budget in May, internal communications obtained by The Independent show.

Emails between officials with multiple health authorities indicate they were not expecting the announcement, and that the province’s lead nutritionist was left scrambling to justify the SSB tax after the government received queries and negative press in the days following the budget.

The communications contradict statements from Department of Finance officials—including Coady, who is also the province’s deputy premier—that Health and Community Services (HCS) Minister John Haggie and officials in his department were consulted before a decision was made to announce the controversial tax.

The emails also cast doubt on the Liberals’ claim that the tax is intended first and foremost to improve health outcomes, as opposed to being primarily a mechanism to generate revenues, which critics say is regressive.

No consultation with government officials, says provincial nutritionist

In a written statement on Oct. 29, a HCS spokesperson told The Independent that “[t]he health implications regarding the implementation of a sugar sweetened beverage tax were considered and informed government’s decision on the matter, including research and significant consultation with the Minister of Health and Community Services and department officials.”

On May 31, minutes after Coady delivered the budget speech, however, Provincial Nutritionist Heidi Boyd emailed several colleagues from multiple health authorities to share a link outlining health-related contents from the budget, adding: “Certainly interesting to see the ‘sugar tax’ in there, much to discuss when we next meet.”

“Wonder where they got that from???” Eastern Health Regional Nutritionist Melissa Caravan responded by email minutes later. 

In a follow-up email, Boyd replied: “no consultation with Gov officials that I am aware of on the sugar tax.”

The following morning, June 1, Boyd emailed Public Health Director Loyola Power and Tina Follett, an assistant deputy minister with HCS, saying that in fewer than 24 hours she had already been contacted by “several” community groups, staff from the regional health authorities, and officials from other provincial and territorial governments “to discuss the rationale behind this decision and the plans for it moving forward.”

Boyd notes in the same email that during her time as provincial nutritionist, “I’ve been asked about a sugar sweetened beverage (SSB) tax several times, either as a way to encourage reduced consumption of sugar-sweetened beverages or as a tax generating option.”

Based on the budget’s contents, she continues, “it looks like this new tax is being proposed as both a way to generate revenue and as a way to ‘help avoid future demands on the health care system.’ So we are to assume this means that it is believed that this increased cost will deter the intake of SSBs, having a potentially positive impact on health outcomes.”

Boyd’s uncertainty around the tax’s development and its potential to deter beverage consumption and effect positive health outcomes is shared by many economic and health experts and supported by a growing body of literature with mixed opinions and varied results from case studies of jurisdictions where similar taxes have been implemented.

The Independent contacted Boyd for comment but was directed to HCS communications staff.

Taxing beverages disproportionately impacts low-income households, experts warn

Newfoundland and Labrador will become the first province in Canada to implement an SSB tax when it legislates a 20 cents per litre levy on drinks with added-sugar, like pop and juices, on Sept. 1, 2022. It’s part of the government’s effort to reduce future health care costs and to make the province one of the healthiest in Canada, Coady has said. 

But the Liberals’ approach doesn’t align with the input and evidence contained in the sources the deputy premier has cited in justifying the tax.

During an Oct. 19 press conference announcing details of the tax, Coady cited a report in the British Medical Journal (BMJ) that concludes “[p]eople appear to be buying and consuming less sugar from soft drinks since the UK introduced a tax on sugary drinks.”

Coady emphasized that the UK study found “the volume of drinks purchased did not change, but sugar purchased in these drinks decreased by 30 grams per household per week, or almost 10 percent,” she said. “So the evidence is pointing to the fact that it does have an impact.”

The UK soft drink industry levy (SDIL), however, is a tax levied on soft drink manufacturers “to encourage them to reduce the sugar content in their products,” the BMJ report states—whereas Newfoundland and Labrador’s tax targets the consumer, not the manufacturer.

Several of the sources Coady has cited also note that SSB taxes are regressive because they disproportionately target lower-income households, and that in order to have a net positive impact they must be implemented alongside other health-related policies.

Close-up of sugar crystals piled on the ground.
Sugar crystals. Photo by David Eccles via Flickr.

Medical experts say sugary drinks and excess sugar consumption can contribute to the development of chronic diseases like obesity, heart disease, and type II diabetes. “Drinking just one can of soda per day can increase the risk of developing diabetes by 22% and increase the risk of death from cardiovascular disease,” according to the Heart and Stroke Foundation.

Newfoundland and Labrador has some of the highest rates of chronic disease in Canada. According to the province’s Chronic Disease Action Plan—which does not propose a SSB tax—63 percent of residents are living with at least one chronic disease.

“Newfoundlanders and Labradorians continue to report low rates of fruit and vegetable consumption and high rates of smoking and inactivity. Evidence clearly shows that these challenges have a negative impact on health outcomes, result in poorer quality of life, increase the cost of delivering health care services, and negatively affect economic growth,” the report states.

“While diabetes, heart disease, chronic obstructive pulmonary disease (COPD), and other chronic diseases continue to be high priorities, they cannot be addressed without considering a person’s overall health.”

The Canadian Paediatric Society’s (CPS) position statement on sugar-sweetened beverage taxes—cited by Coady on multiple occasions—supports a 20 percent levy on SSBs but with the caveat that it be just “one step toward addressing overweight and obesity, and future health consequences of these conditions, in young people.” 

The CPS also says that the revenue generated from such a tax “be used to expand funding for healthy active living programs, including subsidizing fruits and vegetables initiatives, improving access to physical activity opportunities, and supporting food literacy programs. Information on how tax revenues are allocated should be shared with the public.”

The Heart and Stroke Foundation, which has praised the province’s decision, says in its SSB tax position statement “revenues from such a taxation stream should be used to subsidize vegetables and fruit to make healthy eating more affordable,” while also recommending that government “restrict the marketing of all foods and beverages to children.”

Coady has publicized her government’s support for other health-related initiatives, like the Physical Activity Tax Credit, the Liberals’ continued support for the Kids Eat Smart Foundation, and approximately $500,000 in new funding for the Mother Baby Nutrition Supplement—alongside funding for an expanded Insulin Pump Program and for a program to discourage tobacco and vaping use—as efforts to improve health outcomes. 

But the Liberals have not created a process that would ensure the estimated $9 million in annual SSB tax revenues would fund the kinds of programs that health organizations are advocating for.

The World Health Organization (WHO)—also cited by Coady as justification for the SSB tax—notes that “to reduce over-consumption of sugars and halt the epidemic of obesity and diabetes, countries need comprehensive action plans that combine taxation, restriction of marketing of sugary products to children, and education.”

While Coady has promised “quite the education program with this rollout,” no details have been made public. 

Health officials’ confusion following the announcement—coupled with the Department of Finance’s lack of an evidence-based official strategy to ensure targeted health outcomes—calls into question the original motive for announcing the tax.

At the end of the June 1 email to her superiors in HCS, Heidi Boyd notes that other jurisdictions with SSB taxes focused “more on increasing funds available for health promotion.”

But given the province’s “fiscal situation,” she continues “I appreciate this tax may not be created for that purpose in NL but these questions are also coming in.”

The Independent asked HCS for an exact date when Finance first engaged Haggie and his officials on the tax. “We do not have anything further to add,” HCS Media Relations Manager Nancy Hollett responded, saying the department has already provided “significant information on this subject.” 

Finance Minister Siobhan Coady announcing details of the Sugar-Sweetened Beverages tax, 19 October 2021.

Shoot first, ask questions later?

On June 2, two days after the budget speech, Children, Seniors and Social Development (CSSD) Media Relations Manager Gina MacArthur emailed CSSD Assistant Deputy Minister Aisling Gogan and CSSD Policy, Planning and Information Management Director Renee Ryan to say that both CBC and NTV had included in their coverage of the SSB tax announcement the perspective that “it will disproportionately affect low income families,” adding “this has become a common theme in coverage of the tax from all media outlets.”

The Healthy Living, Sport and Recreation (HLSR) Division, within which Heidi Boyd works, was previously a part of CSSD but was transferred to HCS in September 2020.

In response to MacArthur’s email, the communications obtained by The Independent show Gogan shared an academic article published in the Economics and Human Biology journal that concludes: “Low-income Canadians would gain the most health benefit from a sugary drinks tax. However, the lowest income quintile would also pay the largest proportion of income in tax. A tax on sugary drinks is therefore financially regressive but forecast to reduce health disparities across Canada.”

Minutes later, responding to Gogan’s email, Boyd shared another study that she says offers a “pretty comprehensive analysis available on the rationale, impacts and applicability of SSB taxation in the Canadian context.”

Ryan then responds with bullet points copied and pasted from a summary of that report, which was published in 2016 by researchers from Laval University and the University of Montreal. Among the four points is a statement that “[e]xperimental studies in controlled conditions indicate that SSB consumers are sensitive to price change and that a tax has the potential to favour SSB substitution towards healthier beverages.”

The bullet points comprise four of five points from a section of the summary called “Taxation Effects on SSB Demand”. Ryan omitted the fifth bullet point from her email to Gogan and Boyd. That point reads: “These encouraging trends will have to be confirmed over the long term.”

Two minutes later, Gogan replied to the email: “Thanks. We need HoA KMs on this,” signaling a desire to have the curated bullet points ready for potential delivery in the House of Assembly.

The Liberals’ haphazard announcement of the SSB tax represents an about-face on Coady’s part.

In October 2020, an email signed by “a caring citizen” reached the finance minister’s desk. The short message proposed that Coady consider an SSB tax, and that the province could “make milk more affordable” with the revenues.

Coady’s response, obtained by The Independent, states that the “introduction of new taxes must be guided by the principles of sound tax policy,” and that policymakers “must be mindful of the effectiveness, competitiveness, and administration and compliance costs to government and taxpayers alike when considering new taxes.

“While improving health outcomes is a goal of government,” Coady writes in the October 15, 2020 letter, “the long-term effectiveness of taxes on sugar-based drinks, as found in other jurisdictions, remains inconclusive.”

A year later, on October 19, 2021, Coady said during her press conference that the SSB tax is “less about the tax and very much about the improved health outcomes.”

The Independent reached out to the Department of Finance for further information on the SSB tax but did not receive a response by the time of publication.

With files from Heidi Janes.

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