From gummy bears after school to a billion-koruna problem or Let us talk about the “sugar tax”

It is a fairly common thing to see. After the final bell rings, young schoolchildren rush out of school and head straight for the nearest shop. There, for a small amount of money, they buy candy, cookies, or a sweetened drink and wander through the city on their way home. This minor bad habit, which quietly becomes routine, ultimately has systemic implications. And a few decades later, these impacts will manifest themselves in billions of korunas spent on treating diseases associated with an unhealthy lifestyle. 

This image is not a reproach, but rather food for thought. Do we even have the tools to reverse the negative trend? And if so, why don’t we use them?  

One such instrument could be the concept of “sugar tax”, i.e. a tax on sweetened beverages and confectionery. As repressive as it may sound, this measure has already proven effective in a number of European Union countries. And data show that its benefits are not only fiscal, but also health-related. Moreover, we are familiar with excise duty on sugar from the First Republic, when it was introduced by the government of Tomáš Garrigue Masaryk, following the example of Austria-Hungary. At that time, sugar was not a common foodstuff and was thus a luxury item, for which it was easy to control tax collection. However, as you will read below, this privilege no longer applies today. 

Double benefit: Income and savings 

In economic terms, the sugar tax has the potential to improve the budget balance on two fronts simultaneously. In the short term, it brings growth on the revenue side of the budget. In the long term, it can also reduce health care costs – because sugar consumption decreases, and so does the incidence of diseases such as diabetes, obesity and cardiovascular diseases. According to a study by the European Commission, in the Czech Republic, the introduction of a tax on sweetened beverages and the associated 10% price increase would lead to a reduction in consumption by approximately 13.5%, which would undeniably have a positive impact on the health of citizens. 

Moreover, model calculations show that even with very conservative estimates, such a measure could bring billions of korunas in benefits. And if these benefits were returned to the system—for example, in the form of subsidies for healthy school lunches, contributions to school trips, or educational programs in schools—their positive impact could be multiplied. The measure would thus not be perceived by the public as punitive, but as a mechanism to promote a healthy lifestyle. 

Political and systemic reality 

It sounds simple. But the reality would be much more complicated. 

The very definition of what should be taxed is already confronted with unclear boundaries between products. What is a sweetened drink? What if it also contains vitamins? What about a protein bar with added sugar? If the tax is imposed only on sugary products, will consumers not replace them with high-fat alternatives, which, if consumed at high levels, can also have a negative impact on health?  Regulation would have to be precise, detailed, fair and administratively manageable.  

Then there is the issue of tax collection and control. Different rules would apply to large chains, different rules to online retailers, different rules to imports. What about cross-border sales? Preventing tax arbitrage (e.g. by buying abroad untaxed) would require cooperation with neighbouring countries – or at least consistent monitoring. It is therefore also questionable whether the administrative costs to the state caused by the complexity of tax collection would not significantly reduce the tax revenue (not to mention the costs incurred in the private sector for the correct collection of the tax).  

Last but not least, political support would have to be secured. Taxes are not popular. Especially if they interfere with normal consumption. The measure would thus have to be very well communicated. Not as a tool for punishment, but as an investment in future health and prevention.  

The path to reform may not be straightforward 

Yes, it is a challenge. Nevertheless, the current debates on the “sugar tax” at the level of the European Union and the Czech political scene make sense. The basic idea, that it is economically advantageous to prefer healthier choices and tax unhealthy ones, is legitimate and rational.  

And if our ambition is not only to reduce deficits, but also to improve the quality of life, then this path (assuming the right settings) may be one of the most meaningful steps we can take.