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Newfoundland and Labrador says soft drink tax coming in 2022 will be Canada's first

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ST. JOHN'S, N.L. — In an effort to boost health outcomes in an ailing province, the Newfoundland and Labrador government unveiled details Tuesday of what it says will be the country's first tax specifically targeting sugary drinks.

Finance Minister Siobhan Coady told reporters the tax will hike prices on drinks with added sugars by 20 cents a litre beginning in September 2022. The government expects the tax to bring in roughly $9 million a year, she said. The tax will be applied on top of any provincial sales tax.

"Over half of Newfoundlanders and Labradorian residents aged 12 years of age and over have at least one chronic disease, and many people live with more than one," Coady said. The province's tax, if passed in the legislature, will be the first in Canada to specifically target sugar-sweetened beverages, she added.

The provincial government first announced its intent to tax sweet drinks in its 2021-22 budget last May, but the details had not been worked out.

In a media briefing Tuesday before Coady's announcement, officials said the tax will apply to beverages containing added sweeteners such as sugar, corn syrup, fructose and agave nectar. Alcoholic beverages will be excluded — they're already subject to extensive taxing and 20 cents a litre is unlikely to decrease consumption. Chocolate milk is also exempt, as are diet drinks containing artificial sweeteners, infant formulas, yogurt drinks and nutritional meal replacement beverages.

Ready-to-drink beverages, concentrated drink mixtures and dispensed beverages like slushies and fountain sodas will all be subject to the tax. Consumers will pay an extra 20 cents per litre or, in the case of concentrates, 20 cents per every litre that can be produced after mixing. 

The tax is targeted toward consumers and will be reflected in the item's shelf price, officials said.

Coady said the goal of the tax is to improve residents' health and it fits with the government’s effort to make Newfoundland and Labrador one of Canada's healthiest provinces by 2031. "Newfoundland and Labrador spends an estimated 2.8 per cent of its total annual food and beverage expenditures on sugar-sweetened beverages," she said. "This is the highest in Canada."

Certain sweet drinks are now taxed in British Columbia, after the government in April eliminated its provincial sales tax exemption for carbonated beverages containing sugar, natural sweeteners or artificial sweeteners. The United Kingdom employs what it calls a soft drink industry levy, which taxes the manufacturer rather than the consumer.

A study published this year in the BMJ, a journal led by the British Medical Association, concluded there was no change in the volume of soft drinks purchased a year after the levy came into effect in 2018, but there was a drop in the drinks' sugar content measuring about 30 grams per household per week.

In other words, the levy was set up so it prompted manufacturers to make their products with less sugar, rather than putting the onus — and the cost — on the consumer to make different choices, said Josh Smee, chief executive officer of the non-profit organization Food First NL. "I think that's the preferred model, from an equity perspective," he said in an interview.

Valerie Tarasuk, a professor of nutrition at the University of Toronto and principal investigator with Proof, a research team looking at food insecurity and policy in Canada, welcomed the Newfoundland and Labrador government's move.

"I think the effort here is laudable, in that people are hopefully going to see a message communicated by the provincial government that these are bad choices — that this isn't the beverage of choice," she said.

She noted that the province does have an issue with clean drinking water — the government lists 16 pages of active boil water advisories on its website, some of which have been in place for over a decade. "Hopefully the provincial government will parallel the tax with initiatives to make water readily available as a beverage," she said in an interview.

This report by The Canadian Press was first published Oct. 19, 2021.

Sarah Smellie, The Canadian Press