Taxation of Junk Food To Curb Obesity

Junk food is used to describe food items and drinks that are low in important nutrients (protein, fiber, vitamins) and contain high amounts of calories from saturated fat, added sugars and added salts. While the definition of junk food can vary from person to person, everyone can agree that it is not the healthiest category of food. A diet consisting of a high proportion of junk food is linked with obesity and other health issues like diabetes and heart disease.

Obesity is the most prevalent of these conditions and is garnering attention due to rapid rate at which it is increasing around the world. The World Health Organization (WHO) defines obesity as ‘abnormal or excessive fat accumulation that may impair health’. The WHO also says that the worldwide prevalence of obesity has tripled between 1975 and 2016, with 13% of the world’s adult population being obese in 2016. These increases have been attributed to a greater intake of energy dense foods and decreased physical activity.

Since junk food accounts for a large amount of energy dense foods, a link between junk food and increasing obesity can be established. So how can we reduce consumption of junk food and therefore curb rising levels of obesity? Taxation is one of the methods proposed by doctors, health experts and politicians worldwide. They believe that placing an indirect tax on junk food items, much like the taxes placed on demerit goods, will reduce the consumption of junk food. This essay will explore the viability and effectiveness of a junk food tax in relation to the obesity crisis.

The first perspective we will consider supports the idea that indirect taxation is the best method of reducing levels of obesity. The article “A tax on junk food is the best way to fight the childhood obesity crisis”, by Colin Michie, advocates this perspective. Michie is the chairman of the Royal College of Paediatrics and Child Health’s Nutrition Committee in the United Kingdom. His expertise in the fields of healthcare and medicine lends great credibility to his article, making it a valid and relevant source.

Michie’s article focuses on the rapid growth of obesity in the UK, especially among children. He cites falling prices of junk food items relative to healthier alternatives as the primary reason for increased consumption of junk food and greater levels of obesity. The author highlights the effectiveness of an indirect tax using the example of tobacco, stating that household consumption of tobacco in the UK fell when prices of tobacco rose and made it less affordable. The WHO seems to have a similar outlook, claiming that ‘tobacco tax increases are the single most effective policy to reduce tobacco use’. The author argues that a junk food tax will be effective because junk food items, like cigarettes, are demerit goods.

One of the strengths of Michie’s article is his use of statistics to capture the reader’s attention as well as support his argument. The article immediately draws the reader in using shocking statistics which underline the severity of the problem by stating that one-third of children aged between 10 and 11 and one-fifth of children between ages 4 and 5 are now overweight or obese. Michie also refers to Hungary’s implementation of a junk food tax, which not only helped lower consumption of unhealthy foods, but was also cost effective in the long term. The use of a real world example strengthens his argument as it highlight the potential effectiveness of such a policy. There are other cases in which countries have successfully used similar policies. According to The Guardian, Mexico’s sugar tax reduced sugary-drink purchases in the country by 7.6% in the first two years after its imposition.

An Australian study published in 2017 also concurs with Michie’s viewpoint. The study’s results showed that a combination of taxes on unhealthy food and subsidies on could avert around 470,000 disability-adjusted life years (one lost year of ‘healthy life’) and save the health sector in Australia up to US$2.3 billion. Additionally, the author identifies the challenges that would come with the imposition of a tax and proposes methods to overcome them. He suggests a method that incentivises producers to promote healthier alternatives and reduce portion sizes rather than a VAT-type tax on individual ingredients which would hit lower income groups the hardest. Michie is also able to acknowledge the limitations of a junk food tax, stating that ‘fiscal measures alone are unlikely to prevent obesity’ and emphasising the need for greater advertising and education to supplement such fiscal policies.

However, Michie’s article does have its weaknesses. Although his statistics support his argument, he does not mention a source for many of them. This makes us question the validity and reliability of evidence used in his article which weakens his arguments. Some statistics are also vague. For example, he claims that tobacco prices rose between 2003 and 2013 before going on to say that household consumption of tobacco fell between 1980 and 2013. He tries to establish a link between trends from two different time periods which makes the statistics questionable. Furthermore, Michie focuses solely on obesity in the United Kingdom and fails to take into account the global nature of the issue. His narrow outlook prevents him from acknowledging the repercussions of a junk food tax in developing countries around the world and makes his article slightly less relevant to the global debate around obesity.

The second perspective we will consider opposes the idea that a tax on junk food will curb obesity. A source that supports this perspective is the article “We have an obesity problem, but another tax isn't the answer” by Geoff Parker, the Chief Executive of the Australian Beverage Council. Parker’s position displays expertise related to the economics of a potential junk food tax which lends credibility to his article.

In his article, Parker focuses on several real world examples of junk food taxes, such as sugar taxes and fat taxes, being unsuccessful in reducing consumption significantly. Parker refers to studies on junk food taxes imposed by Denmark and Mexico which show that these taxes have damaging effects on the economy, causing losses of jobs and having no improvement on public health. He also mentions a report by global consulting firm McKinsey which looked at 16 different methods of reducing obesity and claimed that 12 of those 16 methods would be more effective than a tax.10

There are other consequences of a junk food tax. In his article for the Huffington Post, Dushyant Krishnan explains how a ‘fat tax’ would be ineffective in India due to the multitude of street food vendors and small fast food restaurants that make up the unorganised food sector. These establishments would not be subject to taxes because they are so large in number and many of them are unregistered. Another difficulty that arises when imposing a tax is the problem of determine which items should be taxed. Nadeem Esmail, director of health policy research at the Fraser Institute, believes that a new junk food tax would require increased bureaucracy as new organisations would be required to decide which items will be taxed and which ones will be exempt from the tax.

Parker’s article has both strengths and flaws. The presence of key statistics, references and examples is one of his article’s greatest strengths. One instance where he uses these to good effect is when he mentions the loss of over 10,000 jobs in Mexico due to the sugar tax. This reference strengthens his argument as it is real world evidence of the potential consequences of such a tax. He ensures that a source is mentioned for each reference and example which makes his evidence reliable. His use of studies as evidence to support his argument is also very effective as it shows that he has conducted sufficient research and is well-versed with the topic. Hi understanding of the subject of obesity is displayed when he acknowledges the complexity of the issue by saying ‘Obesity is a serious and complex public issue with no single cause or quick-fix solution.’

However, Parker’s article seems to be biased by his position on the Australian Beverage Council. He claims that Australian beverage companies ‘have been quietly reducing sugar and calories in their drinks for over two decades’ which seems to be an attempt to paint the industry in a positive light.13 This statement adds no value to his argument and he contradicts it later in the article by saying that obesity levels have risen despite these changes made by producers. He also fails to acknowledge other potential consequences of a tax, such as the increased bureaucracy and its ineffectiveness in developing countries like India.

Prior to my research, I did not know enough about this topic to develop a stance. I was unaware of the fact that many countries already had junk food taxes in place. I always thought junk food taxes were policies used by governments to increase revenue. The analysis and evaluation of various sources has helped me rationalise both perspectives and develop a stance on this issue. Through my research, I have learned that there is an urgent need to stop obesity from becoming a global epidemic and governments around the world are desperately trying to reduce junk food consumption. To strengthen my view on this topic, I would carry out further research into the price and cross elasticity of demand for specific junk food items to help me clearly understand the effects of different types of taxation. I would also like to explore the effectiveness of advertising and education on the consumption of unhealthy food.

My evaluation of both perspectives has led me to believe that a junk food tax would be a viable, effective measure for countries to use in the short run. Although studies show that there is no significant change in consumption in the long run, there is sufficient evidence which proves that a tax will reduce consumption in the short run while being cost-effective in the long run. However, I also think that different countries will need to adjust the tax according to the income and spending patterns of their population in order to yield the maximum amount of benefit from the tax. Taxation is only a short-term fix though. Countries will have to supplement their fiscal policies with other methods such as increased advertisement and education which will lay the foundation for a long term decrease in obesity and consumption of unhealthy food.