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Summer time and ice cream time go hand in hand. But did you know that eating an ice cream is 'a sin' and that you are contributing to the obesity epidemic in Australia by getting fatter? 

A proposed sugar tax could allow for public funding to offset the costs to society of obesity and other sugar related illnesses by first making sugary products more expensive, so that we would consume less, and second by potentially having the money from that tax diverted into the medical sector, to cover the medical costs associated with sugar on society.

Every time we eat an ice cream or drink a soft drink we are consuming a 'ton' of sugar and if we don't moderate our intake then over time we can pack on the kilos and get fatter. A proposed sugar tax falls under a range of taxes that are called sin taxes. They're called sin taxes because the item being taxed has unintended negative consequences and so the tax helps alleviate the cost of the sins that item causes. Other examples of a sin tax could be alcohol and cigarettes where (especially in the case of cigarettes) the taxes are designed specifically to deter people from buying the product.

So would you be willing to pay for your sins via a tax on sugar?

The advantages of a sugar tax are that we know that the cost to society for obesity or other diseases will be paid for by society (through increased Medicare and public hospital usage) and so that increased cost will come from the existing revenue of the government. If money is going towards paying for diseases related to sugar then that means there is less revenue for other projects, such as schools or cancer research. So the sugar tax will mitigate that cost and provide a means for the people willing to commit the sin of consuming sugar to help pay for the negative consequences.

The disadvantages of a sugar tax are that it is a tax and that's more money out of your pocket and even if you do eat sugary products now and then you may never suffer from a sugar related illness. Another problem is that governments are always in need of more general revenue and may one day pool the tax collected into general revenue and so no longer use the tax to target the specific negative externality that it was designed for. In general, it is the lower socio-economic groups that are consuming too much sugar and so many sin taxes hit families that can least afford to 'pay for their sins', a sugar tax may simply become another burden for those that can least afford it. The industries and employees involved in the sugar industry will also be affected by the change in consumer behaviour as the price rises. And finally, consumption of sugar is a personal choice, and many view it as undesirable to have the government controlling our behaviour through the penalty of increased taxation.

If you think about it - taxation on a product simply changes the price of the product. A relatively cheap product with a large tax can become prohibitively expensive and therefore change the behaviour of people in relation to the product.

A sugar tax might be just the solution to help Australians trim down by making sugary products more costly and to help Australia pay for sugar related illnesses through a new source of revenue.