Fat Tax

Topics: Nutrition, Pigovian tax, Taxation Pages: 9 (3314 words) Published: April 26, 2011
http://econ.economicshelp.org/2007/07/fat-tax-why-we-should-tax-unhealthy.html If a government could introduce a relatively painless way to prevent 3,000 lives being lost through terrorist action, do you think we would hesitate to introduce such a policy?

A report by the University of Nottingham and University of Oxford [1], claimed that introducing a tax on unhealthy foods would save, at least, 3,000 lives a year from heart disease. The authors also claim this is a conservative estimate, because it ignores the benefits from the reduced incidence of diabetes, strokes and other obesity related illnesses.

Yet, despite the real benefits promised, many politicians and consumers were quick to dismiss the idea. Is it really a good idea to introduce a fat tax, or do Big Macs deserve to remain cheap and free of extra tax? Arguments for a Tax on Unhealthy Foods

1. Externalities of Unhealthy Foods.
Unhealthy eating has an impact on ourselves but also on the rest of society. Obesity related diseases cost the UK £3.4bn per year. [2] The cost of Obesity in the US is estimated at $75 bn.[3] If we choose to eat foods that make us unhealthy and obese, this creates external costs such as: 1. Medical Costs – treating obesity.

2. Lost productivity at Work e.g. Time off sick
3. Premature death
Therefore, the government should collect sufficient tax from unhealthy foods to pay for the external costs that they create. It is the same principle as to why petrol and cigarettes are taxed; e.g. higher petrol tax is justified because petrol causes pollution. The external cost of unhealthy food is not easy to calculate, but this is not a reason to avoid having a tax. The point is that at the moment society is effectively subsidising the consumption of unhealthy foods, and ultimately it is the taxpayer who has to pay for this. 2. Personal Cost of Obesity

Eating unhealthy foods increases the likelihood of obesity, early death, depression and a whole catalogue of related problems [4]. Higher prices would discourage people from consuming unhealthy foods. It may not stop people eating fatty foods completely, but this is not the aim. Reducing consumption of fatty and salty foods would have a significant benefit in improving health and personal well being. 3. It will save Lives

Currently, more than 216,000 people in the UK die from heart attacks and strokes each year [5]. Heart disease is the second most common cause of death. The report suggests that 3,000 lives per year could easily be saved in the UK. As well as saving lives, reducing obesity will also improve the quality of life.

Arguments against a Fat Tax
1. It is unfair to tax Fat people. It is discrimination.
This is not a tax on fat people. A government inspector is not going to go around with a weighing scale, dishing out tax penalties for people who tip over the scale. This is a tax on unhealthy foods, paid by everyone who chooses to consume them. 2. It's just another scheme to raise government revenue.

A tax on unhealthy foods should be revenue neutral. It is not about raising total tax revenue, it is about switching the tax burden. If the government raised £2 billion a year from such a tax, this tax could be used to subsidise healthy foods, pay for health care or reduce other types of tax. 3. It is a tax on the poor.

The argument is that those on low incomes are more likely to consume unhealthy foods, therefore, this tax will increase inequality. However, if a tax on fatty foods saves lives, we should not avoid implementing it just because it is the poor who will mostly benefit. If we are really concerned about the impact on equality, the revenue from a fat tax can be targeted to the benefit of the poor. An increase in inequality need not occur from a fat tax. 4. Nanny State.

* Who is the government to tell people what to eat? If people want to eat salty and fatty foods then let them. But, the whole point is people are still free to consume as much salty and...
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