Fat tax: should the government interfere with what you eat?

Fat tax

Recently, Kerala government declared a ‘fat tax’ of 14.5 percent on junk food items served through branded food chains like KFC, McDonald’s, Burger King, Pizza Hut.  The world’s first fat-tax was introduced by Denmark in October 2011. Subsequently, after 15 months, the tax imposition was abolished in the country. Other countries like Hungary and Mexico also have government taxes on eatables high in sugar, salt and fat. However, the evidences gathered from other countries with such tax imposition show that there is very little advantage of food taxation to deal with obesity.

Why the fat tax?

A study involving over 192 countries reports an increase of 45 to 48% in the obese population globally. Obesity has become one of the major challenges for healthcare industry. Common factors attributing to obesity include diet, physical inactivity, social issues, and genetics. Obesity not only increases the morbidity and mortality rates, it is a major economic burden for the nation. The country incurs a significant expense on the health care system to manage it.  Obesity leads to lost production due to improper care, early death, and hampered professionalism due to one’s inability to work.

Kerala has maximum number of obese population in India after the state of Punjab. With the increasing impact of western culture, lifestyle diseases are rising among Indians. Government is thus quite desperately looking for policies that may help to reduce the prevalence of obesity. The main objective of the government for imposing such taxes is to check consumption of foods that predispose to national burden of obese population.

Can fat tax really decline obesity prevalence?

Considering the factors contributing to obesity prevalence, it can be concluded that if there is fluctuation in any of these factors, the impact of tax imposition may become unpredictable or insignificant. Consumers may choose to reduce their consumption of fruits and vegetables or other nutritional food to have this high taxed food item nullifying the main purpose of the tax. Certain people might look for substitute to these food items and opt for local products which may have similar or even higher calories than those served in branded restaurants. Overall, there may be a decline in purchase of such food items but it is very doubtful if it will be an effective measure in the long run.

What measure should the government really take to combat obesity?

There can be other ways by which the government can curb the increase in the obese population.  These may include measures such as encouraging healthy lifestyles and adoption of healthy diets, consumer information on the packed food items, narrowing the marketing of such food and providing subsidy on healthy food.

Hence, it can be concluded that the impact of taxation to reduce obesity is quite uncertain and so far evidences gathered from such policies adopted in other countries have not proved any remarkable achievement. This can put forth multiple dilemmas for consumers in their personal choices and induce further complexities.

References:

  1. Smed S, Scarborough P, Rayner M, Jensen JD. The effects of the Danish saturated fat tax on food and nutrient intake and modelled health outcomes: an econometric and comparative risk assessment evaluation. Eur J Clin Nutr. 2016 Jun;70(6):681–6.
  2. Maniadakis N, Kapaki V, Damianidi L, Kourlaba G. A systematic review of the effectiveness of taxes on nonalcoholic beverages and high-in-fat foods as a means to prevent obesity trends. Clinicoecon Outcomes Res. 2013;5:519–43.
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