Fat tax

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A fat tax is a

A fat tax aims to decrease the consumption of foods that are linked to

Unlike placing restrictions on foods or ingredients, a fat tax would not limit consumer choice, only change relative prices.

Benefits of a fat tax

Public health practitioners and scholars in a range of different countries have called for a fat tax on unhealthy foods. The reasoning behind implementing a fat tax is the hope that people will avoid risky dietary behaviours, improving health outcomes in society.^[14] Research indicates that the current obesity epidemic is increasing as a result of the fast food industry expanding. Junk food outlets are changing the dietary habits of society, pushing out traditional restaurants and leading to the detrimental health effects of obesity, diabetes and heart disease.^[15] Taxes on tobacco have seen smoking rates decrease, and as a result there have been calls for fat taxes to be implemented in more countries in an attempt to reduce the consumption of unhealthy foods.^[14]

Criticism

The overall goal of a fat tax is to incentivize consumers to change their preference of specific foods which are deemed unhealthy to prefer healthier foods. While its intentions are good, there are many issues which this tax rate could bring forth. Lower-income households in some countries tend to eat more unhealthy food due to their lower price. For example, in the United States, the fact that junk food is cheaper than healthier food can be linked to the obesity epidemic, especially poorer households.^[16] The institution of a fat tax could hurt those in lower-income households as many of them rely on the cheaper, less healthy foods that would be taxed under such a policy. Since households that are poor typically spend up to 30% of their total income on food, they would not only be unable to afford the healthier foods but they would also be forced to pay more for the foods that they could afford.

Such a tax could also inadvertently tax healthy foods. A fat tax would have to be written very specifically to ensure that healthy foods such as nuts, seeds, avocados and fatty fish, which are all high in fats, are not taxed accidentally.

There is also no guarantee that consumers will change their eating habits. Other similar taxes on tobacco and alcohol have been found to be fairly successful, with many implementations lowering the amount of adults who smoke or drink.^[17] There is also the case where sugary drinks were taxed in Philadelphia, and instead of consumers swapping to more-healthy and untaxed drinks, many drove elsewhere to buy sugary drinks or continued to buy the more expensive taxed drinks.^[18]

History

The first such taxes were introduced in the USA in 1925. Dr

Bruce Silverglade, director of legal affairs for the

Other advocates of the tax, such as Jonathan Gruber^[26] point to the effect taxes have had on alcohol and tobacco use. Five studies published between 1981 and 1998 found that drinking declined as the price of alcohol increased. The same holds for tobacco. In California, in 1988, Proposition 99 increased the state tax by 25 cents per cigarette pack and allocated a minimum of 20% of revenue to fund anti-tobacco education. From 1988 to 1993, the state saw tobacco use decline by 27%, three times more than the U.S. average.

A CBS News poll from January 2010 reported that a tax on items such as soft drinks and foods considered to be junk food is opposed 60% to 38%. An even larger number, 72% of Americans, also believed that a tax would not actually help people lose weight.^[27] However, the question of whether or not taxation influences diet is an empirical question and not simply a matter of public opinion. However, a February 2010 poll by the Quinnipiac University Polling Institute found that New York City residents overwhelmingly favor a soft drink tax, with 76 percent wanting the tax, and 22 percent opposing it. The poll found both Republicans and Democrats favor the tax.^[28]

In October 2011, British prime minister David Cameron told reporters that his government might introduce a Fat Tax as part of the solution to the UK's high obesity rate.^[29]

Japan

Japan implemented the 'metabo' law which included the measurement of waist sizes in 2008 in attempt to overcome increasing obesity rates. The New York Times wrote: "To reach its goals of shrinking the overweight population by 10 percent over the next four years and 25 percent over the next seven years, the government will impose financial penalties on companies and local governments that fail to meet specific targets. The country's Ministry of Health argues that the campaign will keep the spread of diseases like diabetes and strokes in check."^[30] The 'metabo' law involved conducting an annual waist measurement check of people aged between 40 and 75, which was administered by employers and local government.^[31]

The role of employers and local government was to ensure there was a minimum of 65% participation, with a goal to decrease Japan's obesity rates by 25% by 2015 and failure to meet these goals results in a fine.^[31] However, this has erroneously been taken to mean that the 'metabo' law makes obesity illegal.^[32]

Denmark

In October 2011, Denmark introduced a fat tax on butter, milk, cheese, pizza, meat, oil and processed food if the item contains more than 2.3% saturated fat.^[33] However, in November 2012, the Danish Tax Ministry announced it would abolish the fat tax,^[34] stating that it failed to change Danes' eating habits, had encouraged cross border trading, put Danish jobs at risk and had been a bureaucratic nightmare for producers and outlets.^[34][35] The failure of Denmark's fat tax was also due to financial reasons, with politicians identifying the fat tax as a funding source for the government, rather than a health initiative that attempted to improve the health outcomes of society.^[36] The proposed sugar tax plans were also scrapped.^[37] While this tax was a failure in terms of changing consumer habits overall, it did achieve some of its goals in the short term. According to a research collaboration done by Oxford University and Copenhagen University, it was found that 4% less saturated fat was bought and more fruit and vegetables were bought in response to this tax. However, one downside was an increase of consumption for salt.^[38]

Mette Gjerskov, the Danish minister of food, agriculture and fisheries, stated that "the fat tax is one of the most criticized we had in a long time. Now we have to try to improve public health by other means." Although the tax resulted in an additional $216 million in revenue, it also led to numerous complaints from Danish retailers that their customers were taking their business to other countries, such as Sweden and Germany, to take advantage of their lower prices.^[37][39]

India

In the Indian state of

• Pigovian tax
• Sugary drink tax

References