Fat tax
A fat tax is a financial charge imposed on certain unhealthy food and beverage products, specifically those high in fat, salt, or sugar, as a measure to combat obesity and related health issues. This type of tax falls under the category of Pigovian or sin taxes, which target items seen as detrimental to public health, similar to taxes on tobacco and alcohol. The rationale behind implementing a fat tax is twofold: to discourage consumption of unhealthy products and to generate revenue that can help offset the soaring healthcare costs associated with obesity-related conditions.
Countries such as Denmark, Hungary, France, and Mexico have experimented with fat taxes, although outcomes have varied significantly. Denmark's initial fat tax, introduced in 2011, was intended to reduce fat consumption but was abolished a year later due to public dissatisfaction and ineffective results. In contrast, Hungary's tax on energy drinks and high-sugar/prepackaged foods aims to change consumer behavior while funding health initiatives. The effectiveness of fat taxes in genuinely curbing consumption and improving public health continues to be debated among lawmakers and researchers, as seen in various trials worldwide, including efforts in the United States to address unhealthy food consumption through similar measures.
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Fat tax
To combat the rising rates of obesity worldwide, several countries have proposed charging taxes on certain food and beverage products. A fat tax is applied to foods and beverages deemed unhealthy and containing a specific amount of fat, salt, or sugar.
A fat tax is a type of Pigovian tax or sin tax. Lawmakers apply these types of taxes to products such as cigarettes, alcohol, coffee, tobacco, and soft drinks, which are deemed to have negative consequences for a society. Many lawmakers typically view these items as unnecessary for survival, unhealthy, and morally questionable. The purpose of taxing them is to discourage people from using these products as well as to increase revenue to offset rising health care costs associated with the consumption of these products. Analysts argue whether taxes such as these actually curb people from purchasing these types of items.
Obesity
Nearly one-third of the world's population is obese, according to a 2014 study by the Institute for Health Metrics and Evaluation at the University of Washington. People who are obese have an excessive amount of body fat. More than one-third of all Americans are obese or overweight. The United States has the highest percentage of obese people in the world. The percentage of obese people in the world has increased over the past three decades.
According to the National Institutes of Health, being obese puts people at risk for higher rates of heart disease, high blood pressure, diabetes, stroke, cancer, and other health conditions. In addition, being obese causes financial strain. The United States spends more than $190 billion a year on health care for obese people, according to the Journal of Health Economics. This amount, which continues to rise along with obesity rates, has caused lawmakers to develop new ways to target obesity. The enactment of fat taxes is one method both researchers and lawmakers have proposed as a potential way to curb obesity rates.
Fat Taxes Worldwide
Kelly D. Brownell, a professor of psychology at Yale University, was one of the first people to come up with the concept of a fat tax, also called the Twinkie tax, in 1994. In an article in the New York Times, she proposed that the United States implement a 7 to 10 percent tax on unhealthy foods as well as a subsidy on healthy foods, which would be offset by revenue from the fat tax.
As obesity rates skyrocketed throughout the world in the 2000s, proponents suggested taxing foods high in fat and sugar, just as products such as cigarettes and alcohol are taxed. They argued that consuming unhealthy foods posed just as much risk as smoking and drinking.
In an effort to combat the country's rising obesity rates, Denmark became the first nation in the world to pass a fat tax in October of 2011. The government applied taxes to items such as butter, milk, cheese, pizza, meat, oil, and processed foods containing more than 2.3 percent saturated fat. The goal of the tax was to lower Danes' consumption of fat by 4 percent.
Consumers complained about higher food prices, and food companies complained about increased administrative costs. By November of 2012, the Danish government had abolished the tax, citing it was not meeting the proposed goals. It also cancelled plans for a proposed sugar tax. The British Heart Foundation's Health Promotion Research Group concluded that to succeed, the fat tax in Denmark would have needed to be at least 20 percent and that Denmark should have paired it with a subsidy on healthy foods to make an impact.
Denmark's plan inspired several other countries to enact fat taxes themselves. In 2011 Hungary, where about two-thirds of all citizens are overweight or obese, began to roll out taxes on energy drinks and prepackaged foods and beverages that contain high levels of salt and sugar. Hungary's goals were to deter citizens from making unhealthy choices and to raise revenue to fund the country's health system.
France and Mexico soon followed suit and began taxing beverages such as soda. French lawmakers also proposed a tax on foods containing palm oil. Dubbed the Nutella tax after a chocolate-hazelnut spread that would be affected by the tax, the measure did not pass. Countries such as Finland, Britain, Ireland, Israel, and Romania also considered passage of similar fat taxes.
Although the conversation about fat taxes had started in the 1990s in the United States, it wasn't until the 2000s that the country implemented its first fat tax of sorts. Michael R. Bloomberg, the mayor of New York at the time, spearheaded an effort to ban trans fat; this became a reality in 2006. He also mandated that restaurants list calories on menus in an effort to convince New Yorkers to make healthier choices. Bloomberg's biggest effort, however, began in 2012 with a proposed ban on soft drinks larger than sixteen ounces. After much debate and years fighting appeals of the ban, the New York State Court of Appeals rejected the soda ban in June of 2014.
In November of 2014, lawmakers in Berkeley, California, passed legislation to tax soft drinks, making it the first US city to pass a sugar tax. Similar efforts were considered in other cities such as San Francisco, where the measure failed to pass in November of 2014.
Bibliography
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