A sugar tax is about recognising there are costs to the individual and society associated with high sugar products, says Cameron Bagrie.

OPINION: Should we have a sugar tax? Yes.

Too much sugar in diets puts it in the "sin" camp and that requires higher prices via a tax to curb demand and cover the negative impact on society.

The evidence is not overly compelling that a sugar tax will work, though common sense and the economics says if prices rise, demand will wane.

It's probably easier and would make more sense to withdraw the ability to loss-lead – a tactic used by retailers to lure customers by selling goods such as fizzy drinks below price – on unhealthy and high sugar items as a first step.

READ MORE:

* The sugar fix: Is it right to target sugary drinks?

* The case for and against a sugar tax in New Zealand

* Cameron Bagrie: Raise retirement age or create a crisis

We should all agree that some form of action is needed.

Two-thirds of New Zealand adults are overweight or obese. We are the third fattest country behind the US and Mexico. One in three children are overweight or obese.

One in three children presenting at Starship children's hospital are considered malnourished (poor diet). We have some of the poorest child dental health statistics in the developed world.

It's now common for kids to need general anaesthetics to fix tooth decay. The kids suffer. The parents suffer. The health system is burdened.

There are a host of reasons why. Too much sugar is one of them.

High sugar products damage the individual. They also impose what economists call a "negative externality" on society. An externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.

ROSS GIBLIN/STUFF Supermarkets could hold the key to cutting back on sugar.

Society wears the cost of the healthcare and learning disorders in children that high sugar intake can bring.

We tax cigarettes and alcohol as "sin" products.

Environmental regulation is based on the notion of internalising negative externalities. Making the producer and consumer of bad stuff wear more of the cost.

Tertiary education is heavily subsidised because it provides positive externalities to society beyond the benefit education brings to the individual.

There are positive and negative externalities everywhere.

If we can agree that too much sugar is "bad" and there doesn't seem much debate there, the economics is clear-cut; bring in some sort of pricing mechanism (tax) to drive different behaviour.

Unfortunately this is where things get hazy.

The detractors say some sort of sugar tax won't make a difference. That goes against the laws of economics. If you raise the price of something, people will demand less.

But do we have actual evidence that it will make a real difference to obesity, tooth decay and diabetes? The answer is no.

It's because the causes of such diseases and problems are many, and the interventions need to be equally broad.

The New Zealand Institute of Economic Research looked at the evidence surrounding a sugar tax and concluded that the evidence was not compelling.

Mexico, a sugar tax focal point, is seeing consumption fall in response to a sugar tax but it's still early days.

You are not going to solve the problem through a sugar tax intervention alone. It needs to be part of a package. You need exercise, education and moderation.

A win by the All Blacks can't be traced to a training or scrummaging session, team-talk, or goal-kicking practice. They do it all anyway. The same applies with a sugar tax. It needs to be part of a package.

Detractors say a sugar tax will hurt the poor. They are right. Obesity and obesity-related diseases are more apparent across lower socioeconomic groups.

Like GST, a sugar tax is a regressive tax. Low income people will pay disproportionately more of the tax. People on higher incomes will pay disproportionately less.

It's a weak argument. It would be crazy to subsidise high sugar products as a way of making lower socioeconomic groups better off.

SUPPLIED Cameron Bagrie: ''You are not going to solve the problem through a sugar tax intervention alone.''

A sugar tax is about recognising there are costs to the individual and society associated with high sugar products. There are other mechanisms to deal with income disparity.

Consumers will likely substitute for other sources of sugar or calories. There is always some sort of economic leakage when it comes to implementing policy. We have a 5 cents in the dollar difference between the top individual tax rate and the company tax rate. It's not efficient but we have it.

Manufacturers are also likely to substitute one form of sugar for another. The cost of implementation and prospective money raised might be too small anyway.

So there are practical problems.

Maybe we can put a sugar tax to the side - for now. We can get the ball rolling another way.

Just remove the ability to loss-lead on high sugar and unhealthy products. Supermarkets can't loss lead on cigarettes and alcohol. The same should apply to high sugar products including fruit juices, cordials, soft drinks, breakfast cereals, biscuits and cakes.

A host of groups will complain but the Nike script applies: Just do it.