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You’ll Rethink Everything You Eat After Fat Tax

If you had to pay more for all of your favorite foods, would you still think about eating them frequently? Pizza, hamburgers, chips, chocolate, doughnuts, croissants, muffins, pastries, and beverages will all be subject to taxation in India. Do these taxes make sense? Internationally, health-related food and beverage levies are frequently adopted with the goal of alleviating the burden of obesity.

A junk food or fat tax is meant to raise the cost of purchasing unhealthy foods, which is intended to reduce the nation’s rising obesity rate. As of now, only Mexico and Hungary have taxes on junk food. Taxes on fat, sugar, and junk food all act in the same direction.

Should Governments Tax Unhealthy Foods and Drinks?

Numerous public health professionals think that governments should impose taxes on soda, candy, fast food, and other unhealthy foods and beverages because obesity and diabetes are at record highs. The government or authorities have mentioned several substances and nutrients such as fat, saturated fat, salt, artificial sweeteners, and caffeine as potential tax targets.

Both directly and indirectly, such as through mediator factors like weight gain and high blood pressure, a poor diet can lead to disease. Energy-dense foods and beverages contribute calories, but saturated fat causes CVD, salt increases the risk of hypertension, and consumption of sugary drinks raises the risk of diabetes regardless of weight gain. Obesity is also linked to diseases such as heart disease, angina, diabetes, and strokes.

The rate of change in strategies for combating obesity is a reflection of both the relative potency of the evidence and the shifting acceptance of various solutions. Communities should consider taxing unhealthy beverages and foods as part of a comprehensive approach to diet and health, given the difficulty of changing diets and reducing obesity, the lack of “easy” solutions, and the potential for making a compelling argument for adoption.

Pros of Fat Tax

1. Uptick in revenue

Junk food consumption cannot be reduced by simply increasing taxes on it. Even though many may view this as bad, it is a significant advantage for government organizations looking to grow their revenue. Since the majority of junk food junkies will have a hard time stopping consuming it.

We can use the tax’s proceeds to enhance drinking water availability, provide healthy meals in public schools, fund pre-kindergarten education, and take measures to prevent chronic diseases in low-income populations.

2. Better dietary habits

Many people will modify their diets appropriately because they can no longer afford the costs related to relying on junk food. A newly weight-conscious populace will motivate producers to produce healthier substitutes in addition to encouraging consumers to eat better.

3. Reduced Unemployment

In general finding a gainful job is one of the key challenges for many fat persons. Obese people are 25% less likely to be employed. For a variety of reasons, many employers do not choose to deal with people who are overweight. These reasons range from logistical to financial, as no business wants to offer insurance coverage to a person who is more likely to experience serious health problems.

4. Better Health

The country’s general populace will be in better health. Reduced consumption of these foods will stop incidences of obesity, diabetes, and other conditions that impact patients’ quality of life. Extend people’s life expectancies.

5. Lower health-care expenses

Fat taxes might reduce healthcare costs by billions. An overall drop in healthcare expenses would result from a lower prevalence of obesity and other linked health problems, and healthcare systems could use these savings to enhance themselves. 

Scrapped Attempt On similar tax

Despite many benefits, implementing the tax could be extremely challenging because Denmark had to roll back a similar tax after introducing it in 2011 due to extensive criticism. Foods made with saturated fat—butter and potato chips were subject to “fat tax,” but milk and some yogurts were exempted. The Danes discovered that people opted for less expensive alternatives, defeating the objective of the tax on junk food.

Evidence of effectiveness

The aim is to tax junk food so that it becomes pricier than healthy food, a strategy that has already been used in certain nations and cities.

  • Hungary began taxing sugar, salt, caffeine, and several energy beverages in 2011. After four years of implementation of the “Public Health Product Tax,” Hungary’s consumption of taxed unhealthy foods has dropped. Many food product manufacturers have reduced or eliminated the number of unhealthy additives, and the public has grown aware of healthy eating.
  • Mexico’s 2014 excise tax on sugar-sweetened beverages (SSBs) resulted in a 5.5% drop in sales over the first year and a 9.7% drop in sales over the next year, with the highest drop in sales being seen among lower socioeconomic groups. The 8% sales tax on unhealthy products in Mexico also led to a 5.8% drop in food purchases by households with a medium socioeconomic status and a 10.2% drop by households with a lower socioeconomic status.
  • Berkeley, California was the first city to enact the SSB tax in 2014. It levied an excise tax of $0.01 per ounce on sugar-sweetened beverages (SSBs), with few exceptions, such as alcoholic beverages. It is estimated that 47% of the tax was passed on to retail customers through sales prices. The city had a 21% decrease in SSB consumption and a 68% rise in water consumption within 4 months of the policy’s adoption. In lower socioeconomic areas, where obesity is more prevalent, these effects were concentrated. Similar outcomes were seen in Philadelphia after its taxation. 
  • Others, including France, the United Kingdom, and Finland, have also put sugar taxes on sweetened beverages and confectioneries.

Why do so many people contest the adoption of taxes, despite ample evidence showing that taxes lower the consumption of unhealthy foods and beverages?

Cons of Fat Tax 

1. What Foods Are Considered Junk?

Under the Food Safety and Standard Act, the phrase “junk food” is not defined. The concept of what falls under the category of junk food is extremely ambiguous. Many foods, including cheese, can be considered junk food if they are eaten in a particular way. When bought separately, you can utilize them in healthy ways, but when you combine them, you can use them to make cheeseburgers, which people frequently consider unhealthy. It is really difficult to figure out how to tax these kinds of goods.

2. Other Factors Cause Obesity

Not everyone who is obese gained their weight by consuming fatty foods. A lot of the time, an obese individual may be experiencing glandular problems or just be unable to drop weight as quickly as someone else. Some people think that diet choices have less to do with being overweight than a lack of exercise.

3. Unfair to low-income families.

This levy is unjust to low-income households and imposes an undue constraint on personal freedom. The middle class and the poor will be directly impacted by rising fast food taxes since prices will rise. Government tax rises on fast food will eventually have no impact on the wealthy, who will continue to eat it.

4. Food manufacturers won’t allow their sales to fall as a consequence of increasing prices

Taxes do have significant potential benefits, though. If used wisely, taxes might certainly lower the consumption of junk food, which would have the additional advantage of making junk food healthier. The sales of the food industry will not be negatively impacted by price increases. They’ll figure out how to create prepared dishes with fewer unhealthy ingredients. The tax criteria will motivate or drive producers to restructure their products to lower the ingredient content.

5. What about changes in our nutritional knowledge?

Additionally, the development of scientific evidence may significantly impact how policy arguments turn out. Given that our knowledge of nutrition is always expanding and changing. In recent years nutritionists have been recommending diets that are primarily carb-based and low in fat. Now that sugar is evil, fat is favorable again. What if all fats had been taxable when carbs were superior? If the government’s tax laws don’t alter, extra-virgin olive oil may still be subject to high taxes.

India has just begun with the Fat Tax

The government is considering imposing these taxes on packaged foods with saturated fats and salt as well as on sugary beverages.

Kerala is the first state in India to implement this tax. Starting in July 2016 high in fat foodstuffs served at restaurants and fast food chains like McDonald’s, Burger King, Domino’s, and KFC that serve pizza, burgers, tacos, sandwiches, pasta, and patty would be subject to a 14.5% tax. Moreover, there are taxes on several things, such as packaged wheat goods including atta, maida, semolina (sooji), ready-to-eat chapatis, and basmati rice. With an additional 5% tax, coconut oil will also cost more. The announcement evoked mixed reactions; some praised the decision while others questioned Kerala’s government about whether popular banana chips and banana fries would also be subject to a similar taxes.

In the near future, the Kerala government intends to tax more foods, such as products made with refined wheat and sugary beverages.

The Gujarat government is considering levying a 14.5% fat tax on fast food served in food chains and restaurants. The revenue made by this action will be employed to fund the development of healthcare facilities throughout the state.

There will be new tax brackets set up for both branded and non-branded junk food. Non-branded namkeen, bhujia, fruits, vegetable chips, and snack foods are currently subject to a 5% GST, whereas branded goods are subject to an even higher 12% GST. This action is being taken primarily to limit and discourage the use of such goods.

Bottom Line

The concern is whether raising the price of junk food will be sufficient to solve the issue given that lifestyle changes are also necessary. And that other products, such as aerated drinks, are too easily accessible on the market for relatively low prices. The tax’s justification may be sound. But is this the best way to approach the problem? Or is it a flimsy notion? Questions immediately surface over how our government will implement it without causing any ruckus.

Their application of food and beverage taxes in real-world settings has demonstrated that these taxes lower purchases and consumption of specific foods, beverages, and/or nutrients. Taxes on sugary drinks or junk food are likely to promote public health, according to the weight of published data. Poorly structured taxes could negate any health benefits by causing unanticipated repercussions of substitution and complementary food changes. Taxes imposed on particular nutrients are more likely to cause this, as opposed to larger food categories. Because it is more difficult to forecast and assess how a nutrient tax will affect diet as a whole. Therefore, taxes should properly plan and thoroughly examine any health-related food tax to reduce these unforeseen outcomes and improve population health.

In an effort to combat the country’s soaring obesity rates, India has started to take steps including front-of-the-pack labeling, marketing, and advertising of HFSS goods. The fat tax could lend a hand in advancing this aim. Taxes alone won’t eliminate the problem of diet-related illness, but they’ll go a long way toward changing consumer and industry behavior.

REFERENCES

Rajagopal, S., Barnhill, A. and Sharfstein, J.M. (2018). The evidence—and acceptability—of taxes on unhealthy foods. Israel Journal of Health Policy Research, 7(1). doi:10.1186/s13584-018-0264-6.

Hindustan Times. (2016). Burn it: Kerala wants a 14.5% fat tax on junk food. [online] Available at: https://www.hindustantimes.com/india-news/burn-it-kerala-wants-14-5-fat-tax-on-junk-food/story-NA8LFjirzrQxgCVZtyixHJ.html 

The Times of India. (2016). Gujarat considering Kerala-like ‘fat tax’ | Ahmedabad News – Times of India. [online] Available at: https://timesofindia.indiatimes.com/city/ahmedabad/Gujarat-considering-Kerala-like-fat-tax/articleshow/53277914.cms 

apecsecadmin (n.d.). Junk Food Tax Pros and Cons | APECSEC.org. [online] Available at: https://apecsec.org/junk-food-tax-pros-and-cons/ 

Indugu Priya

Pursuing BSc hons in Food Processing and Technology, 2nd year At MS Ramaiah University of Applied Sciences, Bangalore

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