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Weighing Into the Debate About Fat Tax

Interesting though it is, the suggestion in today’s Lancet for a fat tax is by no means new.  Back in the 18th Century Adam Smith famously suggested, “Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.”  So because we’re all getting fatter, should we just plough ahead with a fat tax?

No chance.  The Public Health Minister, Anne Milton, has ruled out the possibility of introducing any measures for the time being.  Instead, the Coalition Government is going to persist with nudging people into making healthier choices, despite the fact that there’s no real evidence that this strategy works.  But why all the fuss about the fat tax?

Well, a primary objection is that such a tax would be regressive – it would affect the poor the most.  But that is to ignore the fact that obesity is more prevalent amongst poorer populations.  And these people would be much more price sensitive to changes in the cost of different foodstuffs.  Assistance to particular individuals or families could be given through a voucher scheme alongside existing tax credits or child benefit.  Retailers could play their part too by offering additional perks for healthy foods through loyalty card schemes.

A second objection is that foods such as cheese which are high in calories and fat, but also have nutritional value, would be unfairly disadvantaged.  But at the moment the anomalies of the UK’s VAT system see fruit smoothies subject to a 20% tax, while biscuits are not.   A duty system which combined both calorific and nutritional content (for which a range of classifications exist) could balance out these anomalies, while at the same time discouraging the cheap energy dense foods that are driving the obesity epidemic.

Furthermore, analysis of the Foresight Report – the seminal study on obesity in the UK – shows that there are particularly weak feedback mechanisms between consumers and producers.  Essentially, we buy what food is on the supermarket shelves.  But with the introduction of reduced duty on low alcohol beers HM Treasury has now adopted the principle of using the tax system to encourage the production of lower alcoholic products.  It would only be a short step to transfer this principle to foods and thereby amplify the feedback between producers and consumers.

But the principal objection is political. The charge against being an oppressive “nanny state” is strong and not one that the Conservatives are ever likely to wear.

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