The effect was greatest on lower-income households, according to the Mexican National Institute of Public Health and the University of North Carolina.

A sugar tax in Australia would work in the same way as taxes on alcohol and tobacco, the Heart Foundation says in a submission to the government's tax review.

"[We] recommend the government investigate tax options to increase the price of sugar-sweetened beverages, with the aim of changing purchasing habits and achieving healthier diets," it says.

But the Food and Grocery Council, representing Australia's $114 billion food and grocery processing sector, dedicated several pages of its submission to the same review discrediting the idea of "single-nutrient taxes".

Such taxes "incorrectly assume that nutrient alone may affect an individual's health outcome", the submission says.

"The consumption of sugar, sodium or fat doesn't necessarily cause obesity, non-communicable disease or shortened life expectancy; these outcomes are dependent on factors including lifestyle, physical activity and genetics."

The council cites a failed fat tax in Denmark. "In 2011, the Danish government introduced a tax on food products containing more than 2.3 per cent saturated fat, including butter, dairy products and meat."

"The tax was abolished after one year in the face of a community backlash and the emergence of unintended consequences from the imposition of the tax."

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Australia's last comprehensive tax review, headed by former Treasury secretary Ken Henry, rejected the idea of a tax on fatty foods in 2010.

Nevertheless, the now defunct Australian National Preventative Health Agency approved a $463,000 study of the potential effects of such a levy. The agency was junked by the Abbott government and it is unclear what happened to the study.

Gary Sacks, a leading obesity researcher at Deakin University and adviser to the World Health Organisation, said price was secondly only to taste in terms of influence on what people buy.

"If you can make unhealthy food more expensive and healthy food cheaper we know that will influence what people buy," he said.

"We also know from other public health issues like alcohol and tobacco that taxes have been very successful in shifting consumption away from unhealthy products."

Dr Sacks said the Denmark tax worked in that it lowered consumption of fatty foods but was axed "largely due to political pressure from the food industry".

"A report out of Mexico this week shows consumption of soft drinks had decreased since they put the tax on so we've got really strong evidence that these things do work."