Keep an Eye on the United Arab Emirates’ New 50 Percent ‘Sin’ Tax on Soda

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Lots of tax dollars sitting right here. Photo: Jeff Greenberg/UIG via Getty Images

Big Soda has a new adversary with lots of money, and it’s not another midsize U.S. city armed with Michael Bloomberg’s billions. On Sunday, the United Arab Emirates began levying a very aggressive tax on sodas and energy drinks. A Coke there now sets you back 50 percent more, while a Red Bull costs 100 percent more dirhams. There’s no other soda tax as high as this “sin” tax the UAE government is now imposing — the soda industry fought tooth and nail to defeat Mexico’s heavy tax in 2013, and that one added just one peso per liter of soda. The AP says shoppers in the UAE flooded stores on Saturday to stock up one last time on regular-priced beverages.

This new “sin” tax (which also applies to tobacco products) is partly the government’s attempt to scrounge up additional revenue, but there are also real health concerns — soda is very popular there, and turns out, so is diabetes. The UAE has one of the world’s worst rates — nearly one in five citizens has type 2 diabetes. The prevalence is at near-epidemic levels, too; that number was around 10 percent of the population in 2010, so it took just seven years to double. The International Diabetes Federation predicts that 40 percent of the population could be diabetic by 2040 if diets don’t change.

Drinking less soda would be an undeniably wise start, but whether taxing sugary drinks will convince people to change their diets is unclear. Mexico’s tax did affect soda sales substantially — they shrunk by 5.5 percent in the first year, then by 9.7 percent the next (still compared to the first). And after Berkeley passed its penny-per-ounce excise tax, consumption fell 21 percent among low-income residents. But the industry has argued that studies show that taxes result in a net reduction of “fewer than 6 calories per day” because people simply replace soda with different caloric crap, and are a real job killer besides, costing Mexico some 10,000 jobs alone and hobbling the industry’s workforce in Philadelphia.

Rest of World Is Watching UAE’s New 50 Percent Tax on Soda