Would A 'fat Tax' Be An Effective Policy To Counter Obesity?

Would a 'fat tax' be an effective policy to counter obesity?

"Life expectancy would grow by leaps and bounds if green vegetables smelled as good as bacon". ~ Doug Larson ~

Yes. Why not tax something that is damaging to our health, preventing more people from buying it and generating much-needed government revenue in the process? Like most things in life, alcohol should be taken in moderation. It`s a treat, and as such we can shell out extra money for our shot of Vodka or pint of Guinness. Similarly, fast food ought to be a rare indulgence and thus we should consume it with discipline. However this doesn`t stop some of the British population gorging on fast food like a tramp on chips. Just look at some of the UK statistics, 7% of men and 21% of women are obese (a body mass index of more than 30 kg/m²). McDonald`s opened its first restaurant here in 1974, and now more than 2.5 million people in the UK are said to visit McDonald`s every day. Is it time we tackled the problem of obesity instead of just treating the health issues caused by it?

It is simple to see that 'extra value' meals are making unhealthy food an attractive, cheap and quick option to the British public. But what if we increased the price of all burgers, kebabs and pizzas sold in the UK by adding a ?2 'fat tax' on top of the normal value? The revenue generated would be colossal, and the potential health benefits due to reduced consumption of unhealthy foods are estimated to save 3200 lives a year. Demand maybe inelastic for fatty foods, but a tax would reduce consumption by a certain amount, and this is the intended effect. For example, a tax on a Big Mac may reduce consumption by 40%. Instead of eating 5 a week, some people may now only consume 3 a week. This reduction of 40% will have a big impact on improving health. The aim is not to stop people eating unhealthy foods, but reduce excessive consumption. In moderation fatty and salty foods do not cause a problem.

However some people would argue even with the increased cost, majority of the public would still choose to eat the same amount of junk food, suggesting junk food is almost perfectly inelastically demanded. People will always want that forbidden treat, and they`ll happily pay for it, which would suggest the problem of obesity would not necessarily be tackled with a 'fat tax' alone. Also problems may arise as a 'fat tax' is likely to be regressive, and thus hit people on the lowest incomes the hardest, causing other social problems.

Then again if the government used the revenue generated by a 'fat tax' to subsidize the prices of healthy food, like fruits, vegetables and fresh fish this could have a positive effect. In today's society, fast food is generally cheaper than a healthy meal, and much easier to come by. A lunch time meal from a healthy restaurant, consisting of a sandwich, some fruit and a bottle of water totals on average £7.15 from 5 different restaurants I have researched. Whereas a burger, chips and a drink has averaged £4.19, making the healthy option almost £3.00 more expensive. There are fast food restaurants at every corner you turn, but healthy, cheap and easily accessible options are much harder to find. By channeling the money produced from taxing fast food into subsidizing healthy food, we are not preventing anyone from eating unhealthy food...we`re just making healthy food more accessible for the public. The whole point is people are still free to consume as much salty and fatty foods as they like. It is just that now they have to pay a fairer reflection of the true cost to society, such ?3.4bn a year for obesity related diseases treated by the NHS. The subsidizing could have the effect of changing social attitudes towards healthy food. If it becomes more readily available then more people will eat healthily and thus it will become more of a social trend and hopefully lower overall levels of obesity in the population.

Obesity is not just a problem to the people it affects it is also a problem as it puts enormous stress on the NHS. The cost of obesity to the NHS is estimated to rise to ?6.2bn by 2015, and this will all have to be paid by the tax payer, even the healthy eating and physically fit ones. But is this fair? Putting a tax on fatty foods would mean the people who consume unhealthy food do contribute more to the health service as they are more likely to use it, and this would also reduce the financial pressures of treating obese people.

In a perverse way not taxing unhealthy food can also have a positive effect on the pressures faced by the NHS. People who eat unhealthy foods have a shorter life expectancy and so the government will pay out less state pensions. Therefore, this reduces the external cost of obesity and so lessens the justification for a tax based on the externalities, such as the medical costs. However the fact that people will die early is hardly a powerful argument for not trying to stop the growth of obesity in the population, as obesity can lead to a less productive work force and thus lower economic growth. More than 18,000,000 working days were lost in 1998 either due directly to obesity (largely people taking time off to consult GPs about their weight) or due to secondary illnesses. Thus a tax to reduce the consumption of unhealthy foods would be a good idea. Yet on top of the tax you would also need to adopt a similar approach seen by cigarettes in recent years. Not allowing the advertising of unhealthy foods anywhere and also branding unhealthy foods as dangerous, like seen on cigarette packets.

Many states in America who have employed the 'fat tax' have seen remarkable results. Other countries are following suit as well. Denmark, Romania and many European countries are seeking to reduce obesity by instituting fat taxes.  Air France is charging a 'fat tax' on obese customers that fly its airline. Obese individuals will have to pay for 1 seat and 75% of the cost for a 2nd seat. Fat taxes on air travel are expected to increase in the future. In the UK, obese people are being charged even after they die! Families are paying extra for coffins and cremation services, for larger individuals. These extra charges across everyday life things will help to counter the problem of obesity by getting the message across to obese people that they should change there lifestyle. Furthermore the money raised in government revenue can also be ploughed back into a scheme to help obese people get into shape and fit. For example maybe providing free gym membership for those who need it most and also a dietician to help keep people who have turned healthy stay healthy. Thus promoting and achieving a healthier population.

On the other hand would a policy like the 'fat tax' be accepted? Some people may argue that those on low incomes are more likely to consume unhealthy foods as they are inferior goods; therefore this tax will increase inequality. However, if subsidies are provided to healthy food suppliers, there will be an outwards shift in supply, the price will drop and allow those on lower incomes to buy food from them. In an ideal situation you would want healthy food to be much cheaper than unhealthy food and more readily available. But fast food restaurants could compensate these high prices by using lower quality raw materials, and thus even worsening the affects of the food while keeping there prices low.

People also need to understand this is not a tax on fat people. A government official is not going to monitor people's weights with scales. This is a tax on unhealthy foods, paid by everyone who chooses to consume them. In some way's the name 'fat tax' can be misleading, you don't call the cigarette tax 'lung cancer tax' so the 'fat tax' should be considered as an 'unhealthy food tax'. But some people argue that just because you tax fatty foods, it doesn't mean obese people will suddenly eat healthily. Taxing cigarettes doesn`t stop people from smoking. If they no longer eat fatty foods because of the tax, what will be their "next best" choice? If you look at the definition of opportunity cost, you will see that we choose something because it is more attractive than the next best choice. The next best choice to fatty foods is not healthy food, meaning that the introduction of a 'fat tax' may not mean people turn to healthy food, just cheaper lower quality fast food.

Furthermore is more government regulation and taxation appropriate for an economic downturn? Taxing consumers will mean they have less disposable income and thus will spend less and slow down economic growth. Also corporations may feel punished that their product is deemed unhealthy by the government, causing many negative side effects. These range from a loss of jobs, as demand for their product has gone down, to companies moving away from taxed countries to ones without taxes. So although the policy of a 'fat tax' may work to cause a general decrease in obesity, it wouldn't be viable if it caused too much disruption to the economy. But the positive from this, is that if fast food companies are put out of business, healthier companies will begin to set up and thrive, which would help create a more healthy population and counter the problem of obesity. So in the short run although we may see a decrease in economic growth in the long run we may see an increase in the UK healthy food market, which would be able to grow and take a large part of the market share of food retailing.

In conclusion, with all things considered I believe the time is right to establish a 'fat tax'. It is sadly ironic that when 25,000 people a day are dying from starvation; people in Britain are dying from obesity. The introduction of the fat tax will reduce the consumption of unhealthy foods; in turn lowering obesity levels. The tax revenue could be reimbursed in more healthy foods and also to help those who suffer from obesity related diseases. In short the choice of a 'fat tax' is too tasty to refuse.