A country that taxed potato chips (Hungary), a country that taxed butter (Denmark), countries that taxed the sugar in soda (the UK and Mexico) — around the world, taxes on "things that are bad for your health" — health taxes — keep spreading, and today 108 countries levy some form of tax on sugar-sweetened beverages (WHO, 2023). But the results diverged. The UK, where manufacturers got ahead of the tax, changed their recipes and cut sugar by 46%. Denmark, whose tax was abolished after just 15 months. Hungary, where revenue grew but consumption slowly crept back. What separated success from failure was "design." We sort it all out from primary sources and empirical research — including comparisons with Japan's liquor and tobacco taxes, and the connection to the unification of beer-type tax rates in October 2026.
How it works: a catalog of the world's "health taxes"
"Health tax" is the umbrella term for schemes that use taxation to raise the price of products linked to health risks and rising medical costs — tobacco, alcohol, sugar-sweetened beverages and the like — in order to change both consumption and manufacturer behavior. It is not a tax aimed at any particular person; the point of the design is to harness the power of prices — "when the price changes, choices change." Here are the flagship examples.
| Country | Common name and year introduced | Scope and tax amount (approximate yen conversion) |
|---|---|---|
| Hungary | Potato chip tax (Public Health Product Tax), September 2011 | Item-by-item tax amounts on packaged foods whose salt or sugar exceeds thresholds: snack foods, soft drinks, energy drinks, confectionery, jams and more |
| United Kingdom | Soft Drinks Industry Levy (SDIL, the "sugar tax"), April 2018 | Soft drinks with 5g or more of sugar per 100ml. Two bands: about 19.4 pence (about 38 yen) per liter for 5–8g, about 25.9 pence (about 51 yen) for 8g or more (rates from April 2025). It is paid not by consumers but by manufacturers and importers |
| Denmark | Fat tax, October 2011 | 16 kroner (about 380 yen) per kilogram of saturated fat on foods containing more than 2.3% saturated fat (butter, meat, cheese, etc.) |
| Mexico | Soda tax, January 2014 | 1 peso (about 8 yen) per liter on sugar-sweetened beverages, plus an 8% excise tax on high-calorie foods |
Look closely at the UK's design. The tax amount splits into two bands based on "how much sugar," and the taxpayer is the manufacturer. In other words, manufacturers were handed an escape route from the very start: "cut the sugar and your tax drops to zero." This difference is what drives the divergent results described below.
Why it exists: the medical costs of obesity, and "price is the strongest nudge"
The background is the medical cost of lifestyle-related diseases — obesity, type 2 diabetes, heart disease. The cost of too much sugar and fat is borne not only by the individual but by society as a whole, through public health systems. Hence the idea of "adding to the price exactly the cost passed on to society" — the same logic as tobacco taxes, extended to food. That is the health tax.
- Hungary's direct motive for going first in 2011 was likewise securing health-care funding. The population's health was among the worst in Europe, and the revenue was earmarked for the health sector
- The WHO (World Health Organization) recommends that countries tax sugar-sweetened beverages; its 2023 report counted 108 countries worldwide already taxing sugar-sweetened beverages — while noting that the tax burden averages only 6.6% of the price, "still too low"
- In July 2025 the WHO announced a new initiative, "3 by 35," calling on countries to raise the real prices of tobacco, alcohol and sugar-sweetened beverages by at least 50% by 2035 — estimating that this would generate about 1 trillion dollars in revenue over the next decade
A health tax is not a "punishment for being overweight." What is taxed is strictly the product's ingredients (the amount of sugar, salt or fat), not the body shape or attributes of the buyer — that is the fundamental premise of the design. The aim is not to blame individuals but to prompt manufacturers to reformulate, and to nudge behavior gently through shelf prices.
The results: "design" separated success from failure
United Kingdom — sugar fell before the tax even started: a victory of design
- The levy was announced in 2016 and took effect in April 2018. During that two-year grace period, manufacturers got ahead of it and changed recipes one after another. Before the tax even began, most major brands had cut sugar below the threshold
- According to the UK government's final evaluation report, the sugar content of drinks in the levied categories (sales-weighted average) fell 46% from 2015 to 2020. Sales volumes of drinks in the 5–8g band fell to less than one fifth and those above 8g to less than half, while total soft drink sales volume grew 21.3% — sugar fell without sales falling
- Revenue was about 327 million pounds (about 64 billion yen) in fiscal 2024 — modest for a beverage tax. But this is a paradoxical design in which "the more everyone avoids the tax by reformulating, the more successful it is," so the small revenue is arguably exactly what was intended
- Building on the results, the UK government decided in November 2025 to strengthen the scheme: from January 2028 the threshold drops from 5g to 4.5g per 100ml, and milk-based drinks, previously exempt, will also be taxed (with an allowance for lactose naturally present in milk)
Mexico — purchases fell in one of the world's largest "experiments"
- In Mexico, a giant consumer of soft drinks, a study in a British medical journal confirmed that purchases of taxed beverages in 2014, the first year of the tax, fell 6% on average — widening to a 12% decline by December at year-end. The drop was largest among low-income households, reaching 17% by year-end
- This result answered the controversy over "do beverage taxes really reduce consumption?" with real data, and helped propel the subsequent worldwide spread of soda taxes
Denmark — the fat tax abolished after 15 months
- Denmark introduced the world's first fat tax in October 2011, but abolished it just 15 months later, in January 2013 — and scrapped the sugar tax it had planned to introduce as well
- Three factors are usually blamed. First, more consumers crossed the border to "shop runs" in Germany and Sweden (Denmark is a small country; you can simply drive to a cheaper neighbor). Second, the administrative burden on businesses was too heavy — calculating and remitting tax on the saturated fat content of each food. Third, political criticism mounted over higher prices and harm to employment
- Empirical studies are mixed: one analysis found saturated fat intake fell about 4% during the tax period, but the decline in total sales of taxed foods was only 0.9%, and the health effect is judged to have been limited
Hungary — revenue tripled, but consumption came back
- Revenue rose steadily from about 67 million euros (about 12 billion yen) in 2012 to about 169 million euros (about 30 billion yen) in 2020. According to an evaluation by the WHO Regional Office for Europe, about 40% of affected manufacturers reformulated their products to avoid the tax
- However, a recent study using household purchase data for 2010–2018 found that although purchases fell right after introduction, consumption recovered as incomes grew, and the share of taxed products in household spending actually rose from 5.9% to 7.4%. The study also flagged regressivity: the burden weighs more heavily on low-income households
- "It works in the short run, but tax alone does not change long-term eating habits" — that is the lesson of Hungary's 14 years
Three lessons: First, a tax that gives manufacturers an exit — "reformulate and escape the tax" — works (the UK). Second, if a cheaper country sits next door, consumers flee (Denmark). Third, if you rely on price alone, the effect fades once incomes rise (Hungary). The same "health tax" can produce opposite results depending on its design.
Comparison with Japan: no "health tax" — but two de facto ones
Japan has no explicit health tax like a sugar tax or fat tax. Functionally, however, the liquor tax and the tobacco tax play part of that role.
| Tax | Scale and burden | Health-tax aspect |
|---|---|---|
| Tobacco tax | About 2 trillion yen a year, national and local combined. For a typical pack of cigarettes, roughly 60% of the retail price is tax | Legally a revenue measure, but higher prices push smoking rates down. Heated tobacco products are being raised to cigarette-level tax in two steps in April and October 2026. The national tobacco tax is scheduled to rise by 0.5 yen per cigarette in April of 2027, 2028 and 2029 (defense funding) |
| Liquor tax | Currently 63.35 yen on a 350ml can of beer, with amounts varying finely by beverage type and alcohol content | In October 2026, tax rates on beer-type beverages will be unified at 54.25 yen (350ml). Beer gets a 9.1 yen cut; happoshu and "new genre" get a 7.26 yen increase |
| Sugar and fat | Not taxed | In fact, a "sugar excise tax" existed from 1901 (Meiji 34) until 1989 (a revenue-purpose tax, abolished when the consumption tax was created). Today food carries a uniform reduced consumption tax rate of 8% regardless of how healthy it is |
The liquor tax is the interesting one. The unification of beer-type tax rates in October 2026 is not about health — it fixes the distortion of "different rates for the same kind of beer" — but it is a real-world example of tax-rate gaps creating, and then erasing, entire products. The very categories of happoshu and "new genre" (third-category beer) were born from manufacturers' development race for a rate cheaper than beer's, and they will lose their reason to exist as rates are unified. The same dynamic by which the UK's sugar tax triggered recipe changes has been at work in Japan for decades.
Meanwhile, although researchers and international organizations have proposed taxing sugar in Japan too, there is no concrete move to introduce one (as of August 2026). Japan's current debate over food tax rates actually points the other way — toward whether to cut the consumption tax on food to zero. A debate running in exactly the opposite direction from health taxes abroad: that is where Japan stands today.
What this means for you: in October 2026, your evening drink changes
- Beer drinkers get a de facto tax cut; "new genre" drinkers pay more. With the October 2026 unification, liquor tax on beer falls by 9.1 yen per 350ml can (about 10 yen with consumption tax), while happoshu and new genre rise by 7.26 yen (about 8 yen with tax). Canned chuhai also goes up by 7 yen. You can run the stock-up-or-switch numbers in our article on the beer-type liquor tax reform
- Tobacco tax increases are locked in for three straight years from 2027. 0.5 yen per cigarette, three times — 30 yen more per pack of 20 in total. At one 600-yen pack per day, that is roughly 220,000 yen a year. With the increase schedule already fixed, now is a rational moment to rethink how much — or whether — you smoke (see also our 2026 tax reform summary)
- When you travel abroad, "local health taxes" are baked into prices. A high-sugar soda in the UK carries about 25 yen of levy per 500ml; a soft drink in Mexico includes a tax of about 8 yen per liter. If the local soda feels somehow expensive, small or watery, that may be the health tax at work
- You can apply this to your own household budget. What the world's experiments showed is a simple, powerful fact: when prices change, behavior changes. Without waiting for a national tax, just making habitual spending on snacks and drinks visible month by month can reproduce the same effect in your own budget
What to do today
What to do today
- Check whether your go-to evening drink is "beer" or "happoshu / new genre / chuhai" (from October 2026, beer drops about 10 yen and the others rise about 8 yen — rethink switching or how you buy before the end of September)
- If you smoke, calculate your annual tobacco spend once — monthly cost times 12 — assuming the three consecutive annual increases from April 2027 (30 yen per pack in total)
- Add up last month's spending on things you buy out of habit — snacks, soft drinks — from receipts or an app, and know the number (visibility alone changes behavior)
FAQ
Q. What is the potato chip tax?
A. It is the common name for the "Public Health Product Tax" Hungary introduced in September 2011. It levies item-by-item tax amounts on packaged foods whose salt or sugar exceeds thresholds — snack foods, soft drinks, energy drinks, confectionery and more. Revenue grew to about 169 million euros in 2020, and about 40% of manufacturers are said to have reformulated; recent research, however, shows consumption itself recovered as incomes grew.
Q. Why is the UK sugar tax called a "success"?
A. Because the design — two tax bands based on sugar content, with manufacturers as the taxpayers — built in a way to "escape the tax by cutting sugar." Between the 2016 announcement and the 2018 start, manufacturers got ahead of the levy and changed their recipes, and the average sugar content of affected drinks fell 46% from 2015 to 2020. Total drink sales volume rose 21.3%, so sugar fell without sales falling — which is why it is praised.
Q. Will Japan introduce a sugar tax?
A. As of August 2026, the Japanese government has no concrete policy to introduce a sugar tax or fat tax. There are proposals from researchers and international organizations, but the current debate on food taxation centers instead on cutting the consumption tax on food. Japan did, historically, have a revenue-purpose "sugar excise tax" from 1901 to 1989, abolished when the consumption tax was created.
Q. Don't health taxes weigh more heavily on people with low incomes?
A. Taxes on food are regressive — the burden as a share of income is heavier for low-income households — and Hungary actually confirmed that pattern. On the other hand, the WHO notes that low-income groups are also the most price-responsive in cutting consumption, so the health benefits accrue largely to them. In Mexico, too, purchase declines were largest among low-income households. How to design for both the burden and the benefit is the shared question in every country.
References (sources)
* Figures are based on materials and published research as of August 2026. Yen conversions use approximate rates of 1 pound = 195 yen, 1 euro = 180 yen, 1 Danish krone = 24 yen and 1 Mexican peso = 8 yen. Foreign rules and figures may change. This article is informational, comparing tax systems; it does not evaluate any particular food, product or individual's lifestyle. For individual tax decisions, consult a tax office or tax accountant.