Advanced taxation-Sugar tax

Sugar tax

Question 1

People will not change certain behaviors unless the government intervenes. It is the reason why the UK government introduced a tax on soft drinks. The primary intention was to decrease its consumption because it causes obesity among young children. The policy will have an impact on the consumers of these products. Therefore, it means that they will decrease their spending on soft drinks. In this case, their sovereignty will be curtailed because they may not have a surplus to spend on these commodities. As a result, the consumers may be forced to look for other alternatives such as drinks with low sugar levels (Burki 2016, pg 182). Estimates indicates that the consumption of soft drinks decreased by a margin of 6% in the first year of its implementation. This number was insignificant because 94% of the UK’s population continued to consume soft drinks.  Besides, it was another source of government. This is one of the ways that the state uses to raise funds to finance various projects. It was expected to raise around £520 million annually. For instance, the minister suggests that the money raised can be used to construct sports facilities in learning institutions. The amenities will be of great significance to the learners as it will assist them in exercising; thus, decreasing obesity among the kids. Children can, therefore, do exercises during their free time at school. This will significantly lower their chances of getting obesity.

The government can use several approaches to determine if obesity has gone down as a result of introducing sugar tax. First, the state can use statistics from the ministry of health to get facts on this issue. For instance, it may be prudent to consider the information obtained from two periods such as the year 2017 and 2018. If the 2018 figures are lower than those of 2017, it will be an indication that this illness has decreased within the UK jurisdiction (Cliffee 2017, pg 247). Additionally, the state can rely on data from an international organization. An excellent example of this entity comprises of the World Health Organisation. It has facts on obesity for various countries including the UK. The previous tax system in the UK was not efficient because it had not expanded its tax bracket. It is the reason why soft drinks that have adverse effects on the public were not taxed.

Investigations reveal that the increase in taxes for soft drinks only affects low-income earners. Therefore, the levy can prevent them from consuming these products. However, it will not have any significant impact on wealthy individuals. They may continue consuming soft drinks as usual. Though, even the poor will devote their resources and purchase these goods. Information from the world health organization indicates that the taxation of soft drinks does not decrease obesity. Thus, the intervention has not assisted in reducing cases of obesity. In this case, there is a need to change strategies if the governments want to reduce instances of overweight among the members of the public (Limb 2014, pg 4). For example, the use of public awareness on the dangers of fast foods can be effective than increasing taxes on these products. Charges are being used to regulate the behavior of individuals because they limit consumer sovereignty, especially among the low-income earners. Besides, it is easier to implement taxes instead of monitoring individuals.

Additionally, the use of levy’s can influence people to look for other alternatives that can improve their health. Finally, the government of the UK should not rely on taxation alone to regulate the behavior of people. Instead, they should emphasise on behaviour change.


Question 2

Hypothecation refers to a situation where the borrower pledges an asset as security before obtaining a loan. It is a common approach used by both individuals and nations to get loans. However, the debtor can continue using the asset as its rightful owner. The lender can only take the item or property if the defaulter fails to pay the amount borrowed.

This method is very popular with the government because there is no transfer of the title of the asset. It means that the state will continue benefiting from the loan and the property at the same time. As a result, it might make it easier to repay the amount borrowed within a short duration. Besides, this approach enables the government to pay low-interest rates on the amounts borrowed (Min 2009, pg 174). The low prices make it attractive to the state because it usually borrows enormous amounts of resources. Therefore, the loan is considered to be more secure than the one from other sources. The competition among lenders in the industry enables the government to benefit from the low interest rates. The government also prefers hypothecation because of its flexible repayment terms. In this case, the state can negotiate with the lenders and pay the loan according to their ability. The credit is readily available in the market because it is usually secured. As a result, the government can get the resources to finance its development projects whenever it needs it.

Hypothecation enables the government to raise money and use it for various activities before taxing citizens to repay the loan. This makes it easy to reduce delay witnessed in the implementation of various state projects. Moreover, the state can borrow another loan even before completing the first one. Lenders can allow it to acquire again as long as the nation has assets to pledge as security. Also, the government can get a tax amnesty if it borrows from a developed country (Pincus 2018, pg 51). The lender can cancel the loan. However, the benefit is only available for developing nations across the globe. Most states also prefer to use hypothecation to improve the country’s credit history. Therefore, it can attract other funds from other lenders in the future. Institutions will only give money to people who can pay what they borrowed. Hypothecation is used across the globe to borrow money from international entities to finance its development projects. One of the examples is where countries borrow money from the International Monetary Fund to finance infrastructural projects. The previous hypothecation never succeeded in the UK initially because of mistrust between the lenders and borrowers.

Question 3

UK’s tax system fulfills the features of a good tax system. The first characteristic of their tax is that it is certain. Every taxpayer in the UK is particular about the amount of levy he or she should pay. The primary purpose is to reduce corruption and fraud in the tax system. Additionally, the citizens are also aware of the amount of taxes that they should pay, the time and the manner of disbursement. The government can even predict the amount of money they should collect after a specific duration.

Secondly, the UK’s tax has equity. It is the essential canon of taxation. It means that citizens should contribute according to their abilities and not an equal amount. In this case, a rich person is expected to pay more money than a low-income earner. The canon suggests that as income grows, one is supposed to pay higher taxes. Another essential characteristic of a levy is the element of convenience. It states that both the time and mode of payment should be convenient for the taxpayer (Wise, 2016). For example, VAT is suitable because it is paid when one has the means to spend.

On the other hand, PAYE is paid when an individual has earned income at the end of the month. Therefore, people will be willing to pay taxes without any resistance. The last canon of the UK’s tax system is economy. A good tax system should attain prosperity. It should have an economy in the collection. The benefit of the levy should outweigh the cost of collection. Finally, the UK’s tax system is also productive because it brings substantial revenues for the government. However, its quest for income should not overburden the citizens.

The sugar tax can be argued from two points of view. One can say that it was not fair because it did not have the feature of equality. It is because all individuals were taxed equally regardless of their incomes (Godlee,2016). Secondly, it was fair as it had the canon of convenience. People were only supposed to pay it when buying soft drinks. Therefore, it was possible for someone to avoid it. Additionally, the public was aware of the amount they were supposed to pay hence, decreasing the chances of consumer exploitation.



Burki, T. (2016). Sugar tax in the UK. The Lancet Oncology, 17(5), p.e182.

Cliffe, C. (2017). Introducing a Sugar Tax, Morally Justifiable? A Debate on the Introduction of the UK Soft Drinks Industry Levy. Universal Journal of Public Health, 5(5), pp.242-247.

Godlee, F. (2016). Sugar tax and screening: listen to the evidence. BMJ, p.i33.

Iacobucci, G. (2016). Sugar tax campaigners plea for action ahead of obesity strategy. BMJ, p.i453.

Limb, M. (2014). UK government rules out a “sugar tax.” BMJ, 348(jun23 12), pp.g4216-g4216.

Limb, R. (2004). The UK beet sugar industry — At a glance. Sugar Tech, 6(1-2), pp.1-4.

Min Tae -Uk (2009). Education and Tax. Seoul Tax Law Review, 15(3), pp.137-174.

Pincus, J. (2018). Grattan Institute’s Case for Sugar Tax Is Not Proven. Australian Economic Review, 51(1), pp.41-51.

Sarlio-Lähteenkorva, S. and Winkler, J. (2015). Could a sugar tax help combat obesity?. BMJ, p.h4047.

Wise, J. (2016). Sugar tax could stop 3.7 million UK people becoming obese, claims report. BMJ, p.i1064.