Describe the impacts of the government implementing a sugar tax on fizzy drinks?

A sugar tax would be a direct tax that would increase the price of fizzy drinks such as diet coke for consumers. This would make it more expensive for consumers to purchase fizzy drinks and would therefore reduce the demand for fizzy drinks. This would help tackle major social health problems such as obesity and dental health problems that affect large numbers of the population especially young people. A negative impact of this proposed tax would be the potential decline in the fizzy drink industry. If less consumers purchase fizzy drinks then producers would not need to produce the same quantities of stock. This could therefore force firms in this industry to scale back on growth and production and could lead to wider redundancies for workers in the industry and the wider supply chain. The fizzy drinks companies are large trans national corporations with huge operations in the UK that could impact the wider economy. However a potential benefit of the proposed tax could be the reduction in the cost to the national health service if less consumers drink fizzy drinks. Higher risks and rates of diseases are linked to the consumption of fizzy drinks and so a reduction in the population that consume these drinks could reduce the cost to the NHS. Rates of type 2 diabetes, dental complications and other illnesses associated with fizzy drinks could decline. This could save the NHS millions of pounds a year and lead to a more productive labour force if there are less workers with healthcare issues. The rise in cost to consumers could lead to a social change in the way people especially young people think about fizzy drinks and could have future unforseen benefits of a change in attitude towards fizzy drinks being an 'occasional treat'.