Similarly, in the USA, various states have sales taxes on soft. A fat tax is not the way to fight obesity. The Danish fat tax was unusual in … https://apps.who.int/infobase/Comparisons.aspx, http://www.vm.fi/vm/en/03_press_releases_and_speeches/01_press_releases/20130131SugarT/name.jsp, http://www.euro.who.int/en/where-we-work/member-states/hungary/sections/news/2013/05/hungarian-food-tax-changes-consumption-patterns, http://yle.fi/uutiset/sweet_tax_fails_to_slow_candy_consumption/6992250, http://www.forbes.com/sites/nathanielparishflannery/2013/11/07/in-response-to-new-soda-tax-coca-cola-bottler-considers-switch-from-sugar-to-high-fructose-corn-syrup-in-mexico/, http://www.coca-cola.co.uk/health/introducing-stevia-sweetener.html, Receive exclusive offers and updates from Oxford Academic, The failure of the UK to tax adequately tobacco company profits, The association between taxation increases and changes in alcohol consumption and traffic fatalities in Thailand, Entitlement to military healthcare - limitations of the NHS model, Prioritizing investments in public health: a multi-criteria decision analysis. white meat such as chicken), but it may very well be unhealthier (e.g. The authors would like to thank Dr Karen Lock from London School of Hygiene and Tropical Medicine for her valuable comments and two anonymous journal reviewers for their suggestions. an empirical evidence on the soft drink market, Experimental research on the relation between food price changes and food-purchasing patterns: a targeted review, Food pricing strategies, population diets and non-communicable disease: a systematic review of simulation studies, Policies to promote healthy eating in Europe: a structured review of policies and their effectiveness, Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered, Accounting for product substitution in the analysis of food taxes targeting obesity, Determining the impact of food price and income changes on body weight, Intended and unintended consequences of a proposed national tax on sugar-sweetened beverages to combat the U.S. obesity problem, Why a macroeconomic perspective is critical to the prevention of noncommunicable disease, Mexico may make Coca-Cola give up cane sugar, Public health: the toxic truth about sugar, Loss aversion in riskless choice: a reference-dependent model, Incorporating reference price effects into a theory of consumer choice, Price and maternal obesity influence purchasing of low- and high-energy-dense foods, Why sustainable and ‘nutritionally correct’ food is not on the agenda: Western Sydney, the moral arts of everyday life and public policy, Should behavioural economic policy be anti-regulatory, Behavioral economics and the food consumer, The Economics of Food Consumption and Policy. Without a proper appreciation of the potential indirect impacts we do not know the overall impact of taxes foods on unhealthy foods and beverages and further that there is a very real possibility that they may not be beneficial for health after all. The tax was not abolished because the food industry suddenly became more powerful, but because ordinary Danes could see it failing before their very eyes. 4 ��w�G� xR^���[�oƜch�g�`>b���$���*~� �:����E���b��~���,m,�-��ݖ,�Y��¬�*�6X�[ݱF�=�3�뭷Y��~dó ���t���i�z�f�6�~`{�v���.�Ng����#{�}�}��������j������c1X6���fm���;'_9 �r�:�8�q�:��˜�O:ϸ8������u��Jq���nv=���M����m����R 4 � �4�5��X�30ma���E��Q�xH{20����� k`� The Danish government implemented this tax in an effort to reduce the population’s consumption of fatty foods, as Denmark’s overweight and obesity rates have steadily increased over the past decade. 81 26 A fat tax would make people pay the social cost of unhealthy food. The government says the tax will raise 74 million euros a year and plans to use the money to help finance healthcare. startxref Although prices and incomes clearly play a substantial role, availability of substitute foods (eaten instead) and complementary foods (eaten together) as well as individual habits and preferences are critical factors that determine what food gets eaten. 2y�.-;!���K�Z� ���^�i�"L��0���-�� @8(��r�;q��7�L��y��&�Q��q�4�j���|�9�� %%EOF '(���k� C^�9F9��7p�g�`�c��xfv�A� Obesity and the implications of high bodyweight are among the greatest challenges facing health systems worldwide. Also called the Twinkie tax, the fat tax concept was pioneered by Kelly D. Brownell, a professor of psychology at Yale University, who wrote about it in the New York Times in 1994. 0000003941 00000 n In addition to strategic pricing, food processers are likely to apply reformulation strategies that may change the quality (and possibly healthiness) of processed foods by using alternative, cheaper inputs or ingredients. In the USA several states have applied small taxes on sugar-sweetened beverages. Part of the consumption is likely to be substituted with an alternative which ideally is healthier (e.g. Coming soon: the fat tax Why do increased income tax rates lower revenue? As the values are usually close to zero, even a small bias in estimation can cause a switch in the direction of the effect (either reduction or increase in the consumption of the alternative product). It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. 0000005119 00000 n 0000009864 00000 n Tax revenue statistics - tables for Statistics Explained; Data sources. Tax evasion, often considered to be synonymous with tax fraud, is the act of misrepresenting or concealing the amount of taxable income on an annual tax return. For example, reforms in the sugar policy in the European Union have lowered the price of sugar in the EU consistently since 200618 and a simulation study using French data showed that a 36% reduction in the price of sugar, associated with the EU sugar policy, would lead to an average decrease in the price of soft drinks by 3.4% (assuming the price decrease is fully transmitted to consumers).18 While the aim of the sugar policy is to make the agricultural sector more competitive, its consequence—to reduce the price of sugar for consumers—is contrary to recommendations of global nutrition and health policies. Distribution of speech-language pathology services on the Gold Coast, Australia, Factors predicting staging and treatment initiation for patients with chronic hepatitis C infection: insurance a key predictor, Impact of COVID-19 on corticosteroids and antibiotics prescribing in England: an interrupted time series analysis, The impact of household energy poverty on the mental health of parents of young children, Smoking during pregnancy: changes and associated risk factors in Spain, 1980-2016, About the Faculty of Public Health of the Royal Colleges of Physicians of the United Kingdom, Unpredictable indirect impacts of taxes: consumer side, Unpredictable indirect impacts of taxes—supply side. Written by: Joe Messerli Nearly 34 percent of Americans are obese, according to the U.S. Centers for Disease Control and Prevention. Governments are, quite rightly, desperately seeking effective policy tools to turn the tide before it becomes a tsunami.1–3 The list of policy options follows the well-worn staples of public health: front of pack labels to improve consumer information on foods, restricting marketing of unhealthy foods, promoting healthy foods and the selection of healthy diets, and subsidizing healthy foods and activities. In smoking’s case, the current average tax on a pack of cigarettes is approximately $2.46, $1.01 of which is Federal tax). Reporting of data to Eurostat. The effect of rising food prices on food consumption: systematic review with meta-regression, Socioeconomic differences in purchases of more vs. less healthy foods and beverages: analysis of over 25,000 British households in 2010, Does the EU sugar policy reform increase added sugar consumption? Hungary, France and Finland) and in various states in the USA. �ꇆ��n���Q�t�}MA�0�al������S�x ��k�&�^���>�0|>_�'��,�G! There are different forms such a tax could take. It is clear that an understanding of these cross-price effects is critical for predicting the actual real-world impact of changes in food price on demand for food and the subsequent effects on population health. A study on the French soda tax found that while the tax was fully passed on to the price of sodas (no untaxed substitutes), the tax was not fully passed on to the price of flavoured water and fruit drinks (substitutes more widely available).28 Similarly, in Denmark, supermarkets did not fully pass on the tax to consumers on butter and oils, while discount stores fully transmitted the tax for blended spreads and oils.8 Interestingly, the discount stores also used the tax to increase their margins on butter and margarine, possibly because of the higher demand for these products from this type of store. Also, due to multiple testing needs, traditional cut-off points for determining the statistical significance needs careful consideration. xref New research has found that fat taxes would increase the cost of living for UK families. Debates on such taxes are also current in Ireland and in the UK. It is not necessarily a fully proportional tax.Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount. a recent modelling of a proposed 10% tax on sugar-sweetened tax in Ireland).26. 0000010434 00000 n Usually, the subject of such a tax is a specific food or drink (e.g. For example, a tax on sugar-sweetened beverages was found to reduce their consumption but also reduced the consumption of foods that were found to be complements, such as ice cream and salty snacks.22, These substitution effects are not new and studies that do not include them generally identify this as a limitation to their findings. Please let me know. What we are suggesting is that we need a much clearer understanding of whether the direct effects of a tax (less consumption of a taxed product) are reinforced, undermined or unaffected by indirect effects. One possibility is to tax the nutrient contents of foods such that those containing more fat or salt, for example, are taxed more heavily. 0000011880 00000 n And it's hoped a "fat" tax would work the same way. 0000010674 00000 n Studies that address cross-price effects explicitly are emerging but these generally focus on either a narrow range of substitutes or on a very broad food group such as low-fat- versus high-fat content products, rather than across the whole diet.22–25, Although cross-price effects tend to be small, they can be really important. But some doctors have warned that such taxes will not only be ineffective in reducing obesity and promoting healthy eating but … Because substitution patterns are a priori unknown, the bias becomes very difficult to detect. In this new study, The Proof of the Pudding: Denmark’s fat tax fiasco, Christopher … Department of Global Health and Development, Faculty of Public Health and Policy, London School of Hygiene and Tropical Medicine (LSHTM), Leverhulme Centre for Integrative Research on Agriculture and Health (LCIRAH). Evidence from Denmark demonstrates that such a policy would not only have negative economic effects, but would also fail to achieve its intended public health objectives. x�b```b``>��������π �,l@̱ I�!����WA���c;[�Z� �tg89̷�Xɳ��|Ƃr������..�P]mQ�eb�ǣr��J�͎m�[��z���M��2[�~�VzL*�tFf���k��3�8�+[g�"�4��c�3�@&��50[00�603�EU�X�f dC��" �LIZ@Z���"J�L�[+09>m�`�? fruits) then consumers' disposable income increases and they could buy something else instead (e.g. 0000002850 00000 n One possibility is to tax the nutrient contents of foods such that those containing more fat or salt, for example, are taxed more heavily. 84 0 obj<>stream (2019, April 30). Formal evaluations of these policies are needed to establish whether the impacts of these taxes are sustained in the medium- to long term. _��-�_T�N�����P.O�]졽^?���\eG���˷��hey{�0 #.�� Data on 192 countries suggest that between 2005 and 2010 the average prevalence of overweight [body mass index (BMI) >25 kg/m2] increased from 45 to 48% and the prevalence of obesity (BMI >30 kg/m2) rose from 15 to 17%.4. Although in absolute terms the change in the quantity consumed may be similar between heavy consumers and those who consume very little of taxed foods—and arguably the absolute change may be more relevant for health outcomes—the consumer welfare is lost due to taxes mostly for moderate, non-problematic consumers. Studies that look at the effectiveness of subsidies generally assume that people's reaction to falling prices is symmetrical to their reaction to increasing prices (i.e. However, within countries, low-income populations are more sensitive to price changes because they spend relatively more on foods compared with their wealthier counterparts.14 Lower socio-economic groups also purchase a greater proportion of energy from less healthy foods and beverages in comparison with those in higher socio-economic groups, and we may therefore expect their consumption of these unhealthy foods to be reduced more by a tax.16 Disregarding the income inequality issue, this is potentially good news for health because lower income earners have a higher burden of risk factors for nutrition-related chronic disease17 and food taxes therefore have the potential to reduce health inequalities. 2. Thus in France, sweets, chocolates, margarine and vegetable fat attract VAT of 20.6% whilst other foods attract VAT of only 5.5%. 0000002893 00000 n A recent review of experimental studies found that food taxes resulted in a reduction in the amount of energy purchased, whereas subsidies resulted in an overall increase.19. 0000002816 00000 n We have simulated the impacts of a fiscal policy in which saturated fat is taxed by increasing the price of a good by 1 percentage point for every percentage point of saturated fat that the good contains; for instance, milk which contains 1.72 per cent of saturated fats will see its price increasing by 1.72 per cent. In the year before the flat tax, Russians in the two higher tax brackets reported only 52% of their income to the taxman. Yet, three recent large systematic reviews point out that most individual studies on the effectiveness of food and beverage taxes generally do not consider these effects5,20,21 which means that a lot of the current evidence base should be interpreted with this caveat in mind. This does indeed apply to most products, including foods, but the responsiveness of the demand for foods to changes in prices is generally low (i.e. For permissions, please e-mail: journals.permissions@oup.com. %PDF-1.4 %���� Overall, there is a need for a much greater understanding of sensitivity to price changes across different segments of the population beyond obvious population characteristics.19 Who in a population actually responds to taxes by lowering their consumption of taxed products, and why? It is equally difficult to foresee the response to taxes from the supply side, i.e. All authors declare no support from any organization for the submitted work; no financial relationships with any organizations that might have an interest in the submitted work in the previous 3 years; no other relationships or activities that could appear to have influenced the submitted work. N'��)�].�u�J�r� 81 0 obj<> endobj Is Being Fat in Japan Really Illegal? Data are collected by Eurostat on the basis of the European system of national and regional accounts (ESA 2010) transmission programme: table 9, 'Detailed tax and social contributions receipts by type and receiving subsector'. �\�(X�-+O�B��y$y h���������1ҠL��^mb�Z��0Bu;�: �8B��3���hABUCY��U�oMp��>6�O{��O3�ķX���!�� �}� n�3ܣ�k�Gݯz=��[=��=�B�0FX'�+������t���G�,�}���/���Hh8�m�W�2p[����AiA��N�#8$X�?�A�KHI�{!7�. When the price of a particular food (e.g. Evidence from behavioural sciences; however, suggests that people's negative response to losses is far greater—often about twice as much—than their positive response to a gain.32 This means that own-price effects are likely to be larger for a price increase (tax) compared with an equivalent price decrease (subsidy).33,34 If this is true then subsidies will be even less effective at boosting the consumption of healthy foods than taxes are at decreasing unhealthy food consumption. However, as a result of the methodological complexity involved in considering the whole demand system in simulation or modelling exercises and the heavy data demands, policy options are all too often being considered without full consideration of substitution effects (e.g. Some of the most well-known ‘health-related food taxes’ have been introduced in Europe. For example, a recent US-based study examining the effect of substitution within 25 food groups from high-fat to low-fat and high-sugar to low-sugar products in the context of a tax on fats or added sugars23 found that if substitution is not considered, a tax on fats is more efficient than a tax on added sugars but if substitution is considered the opposite holds—a reversal in the primary finding. Obesity is estimated to cost the UK economy around £6.6–7.4 billion a year. More complexity, however, comes when we look beyond this direct effect of price on consumption. 0 Similarly, when the effect of substitution between beverages is included, a 20% tax on sugar-sweetened beverages results in smaller reductions in body weight than in analyses in which substitutions are not considered.25 Conversely, the substitution effects may actually reinforce the effect of the tax, if a wider range of substitution effects is considered. Depending on the other foods that consumers may now buy more of, the intended impact of subsidies could again be reinforced or undermined. 0000001218 00000 n A Public Health Food Tax on packaged products with high sugar, saturated fat or salt levels was introduced in September 2011 in Hungary and a tax on saturated fats was introduced in October 2011 in Denmark. No-one would argue there is anything sweet about those statistics. We also know very little on how the food supply side will respond and what overall impact this will have. 100 taxes you pay WHO wants a fat tax? Own- and cross-price effects following a change in the price of beef. A newspaper report from Finland describes the first year of the tax on sweets as a success that raised more revenue than expected while the consumption of sweets dropped.6 Based on this first-year success the Finnish government was reported to be considering widening legislation to create a ‘sugar tax’ to cover a wider range of products with added sugar.7 Similarly, preliminary figures from Denmark, Hungary and France reported a reduction in the consumption of foods and constituent ingredients targeted by these taxes.8–10 However, the most recent figures reported in the Finnish media indicate that the initial drop in the consumption of sweets did not persist and, according to retailers, sweet sales returned to previous levels11 suggesting that the tax only had a short-term impact on demand. EUROPE: ‘Fat Tax’ May Hurt Poor. A flat tax is a system where everyone pays the same tax rate, regardless of their income. }#{~��o��&����������w���"5tlf��'q���ŗ)�s�t� L#��|���~��H��^(����,i����Ka1KC1�'y�^6�C+½wKfՂ�Yi�Z)YW�e7���@�8e�u{�T�\ ������ؾtЪםm��o�乐go:l�������:WZ�$��һI�i��!jt��;��ޥ�i���&�GD��po�)���9�˂r�7���(����w6l=F.�NRd�����,��Ͻ�i_�xd��]����nջ��N��y�=�>��H��)���DZ�G�f>�����-͒���0� �f��j��U��9�f݅�γI��N�}����[u[^M˻I_��u �/㛺3�싑yQL��а A flat tax (short for flat-rate tax) is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base. 0000013351 00000 n 0000007195 00000 n Furthermore, the cross-price effects will apply here too. The fat tax did, however, raise more money than expected, but this only goes to show that it reduced the amount of high-calorie food sold by less than was anticipated. Or watch it … Press Release 11/2013. To sustain sales the food industry may reduce the impact of the tax on consumers through lowering the profit margin of the products being taxed (also known as strategic pricing). Panorama: Tax the Fat is on BBC One on Monday 15 November at 2030 GMT. Supermarkets are also able to spread the higher cost of taxed food onto other foods or own-branded products that typically have higher profit margins. Data from the first full year of the tax is not yet available, but receipts from April to … aAssuming that chicken is a substitute for beef (eaten instead). 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