Why Tax Sweet Drinks and Not Cakes or Cookies?

On the way to work in the morning, you buy a sweet canned coffee, choose a soft drink for lunch, and have an energy drink in the afternoon. On the way home from work, you pick up a bottled drink at the convenience store.

Such scenes are not uncommon in Japan as well as in the Philippines. We consume sweet drinks not as "meals" but as something to quench our thirst or as a change of pace. Therefore, it is difficult to be aware of how much sugar we are actually consuming.

An essay published in the Philippine economic newspaper BusinessWorld raises a simple yet important question about the taxation of these sugar-sweetened beverages.

Why tax soft drinks but not cakes, cookies, or candies that contain a similar amount of sugar?

This question is not just a criticism of the sugar tax. It is the very challenge of modern public health policy: which foods should be targeted by health policies and which should be left to individual choice.

The "Taxation on Sweet Drinks" That Started in the Philippines

In 2018, as part of a tax reform package, the Philippines introduced an excise tax on sugar-sweetened beverages.

Beverages using sugar or artificial sweeteners are taxed 6 pesos per liter, while those using high fructose corn syrup are taxed 12 pesos per liter. On the other hand, exemptions are provided for milk, certain coffee drinks, natural fruit juices, and beverages for medical purposes.

The policy's goal is not merely to increase tax revenue. By raising prices, it aims to reduce the purchase of sweet drinks and curb the risks of obesity, type 2 diabetes, cardiovascular diseases, and tooth decay.

In July 2026, the Philippine Department of Health, the World Health Organization's Philippine office, and researchers from the National University of Singapore held a meeting to evaluate the effects of the system after its introduction and consider future improvements. The system is not just about implementation; it has entered the stage of examining whether consumption and health conditions have actually changed and whether it has influenced companies' product designs.

The policy research department of the Philippine Congress has pointed out that the current taxation based on beverage volume does not adequately reflect the differences in sugar content among products.

Applying the same tax rate to beverages with very high sugar content and those with relatively low sugar content weakens the incentive for manufacturers to reduce sugar. For consumers, it also becomes difficult to discern which products are healthier based on price.

In other words, the current debate is not about whether to continue or abolish the sugar tax. It has shifted to the issue of system design: how to restructure it to lead to health improvements.

Why the Initial Target Was Beverages, Not Cakes

There are countless foods containing sugar. Still, there are reasons why many countries have first targeted beverages for taxation.

Firstly, beverages allow for quick sugar intake.

Cakes and cookies take time to eat as they require chewing. They also contain fats, proteins, and dietary fibers, which can create a feeling of fullness. Of course, overeating can lead to high calories, but many people recognize cakes as part of a meal or a snack.

On the other hand, sweet drinks can be consumed even when not hungry. They can be taken with meals, and it's not difficult to finish a 500-milliliter bottle quickly. Being liquid, there's also the problem of not recognizing the energy intake as the "amount eaten."

Secondly, it's easier to define the taxation target.

For factory-produced bottled and canned drinks, the volume, ingredients, sugar content, and number of shipments can be relatively accurately grasped. Taxes can be collected at the manufacturer or importer stage, making it easier to handle administratively.

In contrast, cakes and cookies come in an extremely wide variety. There are packaged sweets made by large companies, products from local pastry shops, hotel desserts, and homemade sweets. Not only sugar but also flour, butter, and cream influence health, making it difficult to classify uniformly based on sugar content alone.

Thirdly, it encourages manufacturers to "reduce sugar."

If the tax rate increases according to the sugar content, manufacturers will change recipes to avoid taxation. Instead of consumers simply paying higher prices, the sugar content of products on the market may decrease.

The important goal of a health tax is not to punish consumers. It is to guide companies to change their products to be more health-conscious through pricing.

The Question Remains: "Is Cake Okay?"

There is rationality in starting taxation with beverages. However, that doesn't mean cakes and cookies become harmless to health.

Sweets that contain a lot of sugar and fats can be high in calories even in small amounts. Regular consumption of pastries, donuts, ice cream, chocolate, and baked goods can lead to excessive energy intake, similar to beverages.

Raising the price of beverages alone could lead consumers to buy more sweets or other high-calorie products instead of reducing sweet drink consumption. This is known as the "substitution effect."

If there are many unnatural exceptions at the boundaries of the system, public acceptance will also be lost.

For example, while sugar-sweetened sodas are taxed, drinkable yogurt with a similar sugar content is exempt. Bottled coffee is subject to tax, but sweet drinks made in-store are not. Even products with reduced sugar face the same burden due to artificial sweeteners.

In such situations, it may be perceived not as a health policy but as merely taxing easily accessible products.

According to the World Health Organization, at least 116 countries have some form of tax on sugar-sweetened beverages. However, many systems exclude sweetened dairy drinks, fruit juice drinks, sweet canned coffee, and bottled tea from the target.

Moreover, the median of global sugar-sweetened beverage taxes remains at about 2% of the price of typical carbonated drinks. A tax rate that barely changes the price may not sufficiently influence consumer behavior or manufacturers' product development.

What matters is not the fact that "there is a tax," but what and to what extent the system changes.

On Social Media, "Health Policy" and "Opportunistic Price Increases" Clash

On social media and online forums in countries that have introduced a sugar tax, public reactions are sharply divided. While posts are not opinion polls and do not represent the entire society, they provide clues as to where dissatisfaction or expectations with the system are concentrated.

A prominent opinion is, "I agree with the concept of the system, but the current setup is flawed."

On Polish online forums, there was criticism that even drinks with non-sugar sweeteners are subject to the burden, and that the treatment of similar drinks changes based on sales methods, milk content, and fruit juice percentage. Reactions included comments like, "Isn't it a tax on sweetness rather than sugar?" and "It's a cash grab under the guise of health measures."

Particularly strong backlash arises when the use of tax revenue is unclear.

If prices only rise without a tangible sense of returns in school meals, dental check-ups, diabetes prevention, or beverage facilities, consumers perceive it more as a tax increase than a health policy. Even a small price increase can accumulate as a burden for those who purchase regularly or for low-income households.

On the other hand, there are voices supporting the system, saying, "If we don't start somewhere, nothing will change," and "If companies reduce sugar, it makes sense."

On U.S. forums, there are opinions seeking products with about half the usual sugar content and posts appreciating systems where sweetness can be chosen, like in bubble tea shops. Comments like "Soft drinks are too sweet" and "I wish there were more low-sugar options for cakes and cookies" are also present.

These reactions indicate that consumers do not necessarily want "sweet things to be banned." What many people seek is a market where they can choose slightly less sweet products, rather than an all-or-nothing approach.

If taxes lead companies to increase low-sugar products and make prices affordable, the system will be more easily accepted. Conversely, if products remain unchanged and only prices rise, opposition will be strong.

The Effect of the Sugar Tax Cannot Be Measured by "Consumer Endurance" Alone

A study targeting five U.S. cities reported that after the introduction of excise taxes on sugar-sweetened beverages, the retail prices of the targeted products rose, and the purchase volume decreased by about one-third.

However, just because the purchase volume has decreased does not mean that obesity or diabetes will immediately decline. Health conditions are determined by various factors, including overall diet, exercise, sleep, income, work environment, education, and access to healthcare.

Treating the sugar tax as a panacea will lead to disappointment.

What should be focused on instead are changes such as whether companies develop products with lower tax rates, whether consumers find it easier to choose water or unsweetened drinks, whether advertising to children decreases, and whether tax revenues are used for preventive healthcare.

The sugar tax is not a standalone policy to reduce diseases. It should be positioned as one means to create an environment where healthy choices are easier to make.

Japan Does Not Impose a Special Tax on Sweet Drinks

Currently in Japan, there is no nationwide system that specifically taxes sugar-sweetened beverages for health reasons.

Takeaway soft drinks, sweets, cakes, etc., are generally subject to a reduced tax rate of 8%. The consumption tax rate does not change based on the amount of sugar. Both unsweetened tea and sugar-sweetened beverages are basically classified as the same "food and drink" under the tax system.

In 2025, a proposal was made by domestic medical policy organizations urging the Japanese government to reconsider its opposition to including a tax on sugar-sweetened beverages in the political declaration on non-communicable disease measures by the United Nations. The Japanese government is seen as having taken a cautious stance on taxing specific foods.

The background includes the fact that Japan's food culture and health issues are not identical to those in Western countries.

In Japan, not only obesity but also "thinness" and excessive dietary restrictions, especially among young women, are issues. According to a 2023 survey by the Ministry of Health, Labour and Welfare, the percentage of obese individuals with a BMI of 25 or higher was 31.5% for men and 21.1% for women, but it is not necessarily appropriate to encourage uniform weight loss for all citizens.

A system that gives the impression of "blaming those who eat sugar" or "fining those who are overweight" risks exacerbating health disparities and prejudices about body shape.

On the other hand, sweet canned coffee, lactic acid drinks, sports drinks, energy drinks, and sweetened tea are also familiar in Japan. Some products, with healthy-looking packaging and expressions like "vitamin-enriched" or "for fatigue," make it difficult to be aware of the sugar content.

Especially sports drinks, while useful during exercise or when sweating a lot, can lead to excessive sugar intake if consumed in large quantities as a daily hydration source.

It cannot be said to be an unrelated issue in Japan.

If Introduced in Japan, It Shouldn't Be a "Uniform Beverage Tax"

If Japan considers taxing sugar-sweetened beverages, it needs to learn from the experiences of various countries, including the Philippines.

Firstly, the tax rate should be gradual, based not only on the volume of the beverage but also on the concentration of added sugar.

Products with low sugar content should be tax-exempt or have a low tax rate, with the tax rate increasing as certain standards are exceeded. This creates motivation for companies to reduce sugar even a little.

A system that simply "increases the price of all soft drinks by 20 yen per bottle" offers no benefit to companies for reducing sugar. Consumers also cannot distinguish between high-sugar and low-sugar products based on price.

Secondly, judgments should be made based on ingredients, not product names.

If only carbonated drinks are targeted, excluding sweet coffee, dairy drinks, fruit juice drinks, and energy drinks, consumption will merely shift to non-taxed products. It is desirable to have a system that looks at the amount of added sugar across product categories while excluding unsweetened drinks and water.

Thirdly, labeling policies should be combined.

Show the sugar content on the front of the product and introduce intuitive labeling like "how many sugar cubes are in this one bottle." It's necessary to provide consumers with information they can compare, not just raise prices.

In restaurants, consider making less sweetness the standard setting, with additional syrup or sugar as an option for those who want it. In cafes and bubble tea shops, making sweetness level indications an industry standard could also be effective.

Fourthly, the use of tax revenue needs to be clarified.

Allocate it to the installation of water supply facilities in schools, parks, stations, and public facilities, dental check-ups for children, school meals, early detection of diabetes, and support for healthy food for low-income households.

If the cycle of "money collected from those who buy sweet drinks is used to increase healthy choices" is visible, understanding of the system will be easier to obtain.

Fifthly, the impact on low-income people should not be ignored.

In the sense that households sensitive to price will reduce their purchase volume, the health effect of the tax is significant. However, if safe water or unsweetened drinks as alternatives are expensive or not easily accessible, it will simply be an increased burden.

Maintaining trust in tap water, increasing public water supply locations, and making unsweetened drinks cheaper than sweet drinks are prerequisites.

Should Cakes and Cookies Also Be Taxed?

Just because a beverage tax is introduced doesn't mean that all cakes and cookies should immediately be taxed as well.

Sweets have cultural and social roles. Treating birthday cakes, regional Japanese sweets, and seasonal event sweets all as "unhealthy products" would likely provoke strong opposition. It could also impose excessive administrative burdens on small confectionery stores.

However, it is not rational to permanently exclude ultra-processed foods with large amounts of sugar, saturated fats, and salt just because they are not beverages.

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