I've been asked to take part in a BBC local radio broadcast this morning on tax and obesity. The inspiration is a new report from the Overseas Development Institute (ODI) about which the Guardian report today:
The extent of the world's obesity epidemic has been thrown into stark relief as a report from the Overseas Development Institute (ODI) puts the number of overweight and obese adults in developing countries at more than 900 million.
Future Diets, an analysis of public data about what the world eats, says there are almost twice as many obese people in poor countries as in rich ones. In 2008, the figures were 904 million in developing countries, where most of the world's people live, compared with 557 million in industrialised nations.
One of the solutions to the obesity issue that has been suggested is a 'fat tax'; that is a tax on sugary foods, in particular.
I have to say I am not in favour of such a move although I have long argued that tax can and should be used for social purposes by repricing goods and services that the market delivers at prices that do not take into account their externalities i.e. their social consequences. The trouble with repricing food in this way is that this is a very blunt instrument. We need sugar, and some fat in our diet. Taxing it hits everyone - and there is still a major problem of malnourishment and a failure to thrive in developing countries because of a straightforward shortage of food. Taxing basic food stuffs would hit those already suffering in that way.
But taxing advertising for the foods that cause obesity does not suffer from this problem. Obesity is caused by two things, fundamentally (and I am aware of simplifying things here). One is a lack of education on a healthy lifestyle (including diet) and the second is the promotion by business of food products that encourage poor dietary choices.
So, as I argued in the Courageous State, I think the solution is to tackle the specific cause of the problem through the tax system and not the ingredients of foods likely to encourage obesity. How should we do that?
First, all advertising of such foodstuffs aimed at children should simply be banned.
Then such adverts should carry an additional VAT charge, whether an advertising tax or a higher rate of VAT. And third, business should not be allowed to offset the cost of advertising such foodstuffs against their income when it comes to calculating their tax liabilities.
Of course this won't entirely solve this problem: I accept that. But it would do three things. First it would help correct for the market failure in the pricing of these products as their cost would probably increase and cheaper, more balanced, alternatives would be more attractive.
Second, awareness of the issue would be increased by the simple existence of the tax.
And third, funds would be raised for vital food and nutrition education programmes.
There is no perfect solution to this problem, but this is one that goes some way to tackling it.
PS The broadcast is on BBC Radio Wiltshire between 9 and 10 this morning - I amy update when I know more.
PPS I just hope they don't ask about my weight.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
While I am broadly in support of what you say, there is a simple factual error here:
“We need sugar, and some fat in our diet.”
We do not and never have needed sugar in our diet. We need protein and fat (many vitamins only dissolve in fat), we need vitamins and minerals. We may need some complex carbohydrate (but “need” in that context means nice to have rather than strict medical necessity). But mankind did very well without sugar for a very long time. Other than honey, which was a valuable commodity beyond the reach of most, there was no sugar in the European diet beyond what is naturally found in fruits until the production of sugar cane became industrialised.
The truth is, sugar is the foundation of almost all dietary problems. It is addictive, has no benefits other than the short term taste and blood sugar “hit” and it is causing massive public health issues. It certainly causes greater damage than many illegal drugs, and we no more need sugar than we “need” heroin.
I am open to correction!
Indeed -many foods contain natural sugars and these are more than enough in themselves.. One major problem is the increased (over last 30 years) of packaged prepared meals which now dominate supermarket shelves with there environmentally damaging levels of waste and highly processed contents. The supermarkets are fundamentally irresponsible in my view ans are happy to create the obesity epidemic and help the growing bariatric surgery industry make more money out of human suffering.
Roger
I think you’re wrong here. You’re referring to processed sugar. Mankind does need sugar & it occurs naturally, as I understand it, in almost all fruits.
A very thoughtful piece on the blunt instrument of a regressive and across-the-board “fat tax”. Much better, as Richard says, to target then tax the major problem areas such as advertising at children.
The answer is even simpler.
Obesity and abject poverty do not exist together.
Obviously, we have to encourage abject poverty as a solution to obesity.
Oh……..
And we also need to find a better way of diagnosing obesity rather than the BMI….some 150 years out-of-date.
Hi Richard, I was initially in favour of a ‘fat tax’ as a sort of Pigovian tax but your idea of instead targeting advertising of unhealthy products (and other useless cr** that no one really wants except to keep up with their peers thanks to advertising) is smarter still; a Pigovian tax with no regressiveness about it. Very smart thinking
Obviously you´re missing the point.
The proposal for a ´fat tax´ is interesting, although a bit difficult to institute.
A tax on sugar content?
Then you have to decide between naturally-occuring sugars and inserted sugars, when all sugar occurs naturally that is going to be another problem.
Glucose: http://hyperphysics.phy-astr.gsu.edu/hbase/organic/sugar.html
Fructose: http://hyperphysics.phy-astr.gsu.edu/hbase/organic/sugar.html#c3
Lactose: http://en.wikipedia.org/wiki/Lactose
So much simpler to impose a tax on all foods. Now…a lot of food is 0% VAT rate, so if we just put VAT on all food products, problem solved. Eventually.
Mind you, I can see the way this is going, which is towards all foodstuffs being standard rated ¨for our own good¨.
From my viewpoint, there are a lot of things zero rated which could be upped a rate or two…most financial products or services !
I am seeking to avoid deeply regressive and unfair taxes whilst targeting harmful activity
You do not do the latter in an effective way but would deliver the former
I think it may be you who is missing the point
I may be missing your point Richard, but you are missing my point.
This, to me, is another way of increasing taxation for our own good. While it may make a difference to a few, it will make no difference to the many; health-wise.
Putting a tax on high-fat foods will almost certainly increase the ¨value¨ food products on many s/mart shelves to a higher price than the higher-priced but lower fat products!
Ditto sugars, which comprise quite a percentage of the volume of the lower price foodstuffs.
It will certainly make a difference to the obesity problem (refer back to my take on the BMI problem) while increasing the food price problem.
I can refer to one of my grandchildren, ¨diagnosed¨ by ¨educational welfare professionals¨ (sic) as underweight for her age (that old BMI thing again). Her parents were advised they needed to undergo a ¨family-centric diet advisory course¨ to ¨correct her weight deficiency¨. Instead they got their doctor to refer them to child health clinicians at the hospital. Diagnosis?
No problem with her health or diet. After looking at her diet, family history and height/weight/age, they gave her a clean bill of health. That was received well at school: Not.
I think a look is needed at health practices nationwide to see the scale of ¨kickbacks¨ for referrals to other care services.
With respect, of course.
In your case, I accept that!
As always, when reading startling news, one should look at the other side of the coin. The press are, after all, in it for the money too!
¨Obesity and overweight are very different. Overweight refers to a Body Mass Index (BMI) over 25 whereas obesity refers to a BMI over 30. Obesity, especially severe obesity, is associated with a range of negative health outcomes, whereas being ##overweight is not associated with higher mortality.## Indeed, being overweight is associated with slightly lower mortality, as a meta-analysis of 97 studies showed last year¨
http://velvetgloveironfist.blogspot.co.uk/2014/01/has-obesity-quadrupled-in-developing.html
And of course there is the other side, people who are UNDERWEIGHT have a higher incidence of morbidity when ill. As do those who are obese.
Beware politicians bearing health-plated gifts.