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Should Taxes be Imposed on Junk Food?

| Tuesday July 26th, 2011 | 1 Comment

Last August, the UK proposed introducing a ‘fat tax’ to combat the increase in obesity. Researchers at Oxford University and Nottingham University claimed that a 17.5% VAT on unhealthy food could save up to 3,200 lives a year. Besides encouraging consumers to purchase healthier foods the tax could be used to subsidize the cost of more expensive, healthy foods.

More recently the Chalmers University in Sweden found that putting a tax on meat would result in reduced consumption. A tax of  €60/ton of CO2-equivalent would reduce greenhouse gas emissions from European agriculture by 7% and would also reduce beef consumption by 15%. The study also found that if the land made available by decreasing meat and dairy production was used to produce bioenergy crops, agricultural emissions would drop a further 42%. This tax is not meant to nudge people towards a vegetarian diet but instead a more “climate-smart diet.”

In more recent news more than 30 cities in America including New York, San Francisco and Philadephia are considering a tax on junk food to combat the obesity epidemic. In an article for New York Times acclaimed Food Writer Mark Bittman implies that if even a marginal tax was imposed on unhealthy foods, it would decrease consumption. These tax dollars could then be subsidize healthy food like wholegrains, vegetables and fruit or even organic products. The article states:

Health-related obesity costs are projected to reach $344 billion by 2018, roughly 60% of that will be borne by the federal government. The Rudd Center estimates that, “a 20% increase in the price of sugary drinks nationally could result in about a 20% decrease in consumption, which in the next decade could prevent 1.5 million Americans from becoming obese and 400,000 cases of diabetes, saving about $30 billion.”

Justifying a Tax

Currently in America it is harder for people to buy fruit than it is to buy Froot Loops or chips. Sugary cereal is often the first thing consumed during the day and this has led to concerns of increase in juvenile diabetes. For this and several other reasons, imposing a tax on unhealthy foods makes a lot of sense.

However, substantial roadblocks stand in the way of instituting such a tax, despite the fact that it makes a lot of practical sense.
The fact of the matter is that sin taxes are politically unpopular because they infringe on personal choices, and no legislator wants to be accused of being a nanny. Furthermore, agriculture lobbies are extremely powerful. 

Since public health is the role of the government, it does indeed have every right to impose a tax. However the practicality of such a tax is sadly low.

Image Credit: Getty Images


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Categorized: Agriculture & Food|

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  • Salba

    Absolutely spot on, why should health conscious taxpayers be paying for public costs incurred by those eating widely available and cheap junk food? But I would say a tax of this nature is missing the point.
    Food production, storage and delivery represents a whopping 20% of all greenhouse gas emissions…and in the big picture climate change is an infinitely more urgent issue, and greater threat, than obesity.
    By imposing a carbon tax on food (as it relates to methane, nitrous oxide and carbon dioxide emissions), and a carbon tax on electricity and energy, we would ensure that food products that have been processed a number of times become more expensive. Generally, the more we process foods the less healthy they become. We would also ensure conventional dairy and meat becomes more expensive. In this way healthy, organic and sustainably produced meat, dairy, fruits and vegetables will become more affordable. As a huge spinoff, fewer harmful pollutants will be released into our water and air, and our GHG emissions would be lowered. In addition, we would be paying the right price for food, paying for our externalities, and being able to buy less junk.
    An obesity tax is convoluted and misses the point: if we just followed the laws of nature, and adjusted our own laws to reflect what is good for the earth, we would be healthier. By applying carbon taxes to food production we kill two birds with one stone – our own health and the health of the natural earth. The cheapest way is not always the best way, and when we do not price externalities, we incur the cost eventually.