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Do We Need Junk Food Taxes?

I've spent half a century (yikes) writing for radio and print—mostly print. I hope to be still tapping the keys as I take my last breath.

How did that lettuce leaf get in there?

How did that lettuce leaf get in there?

Potato chips are yummy; loaded with fat, calories, and salt; and have very little nutritional value. By eating chips, sweetened baked goods, and other junk foods, people risk poor health outcomes. Society as a whole pays a stiff price for treating illnesses caused by poor dietary choices. So why not tax junk food to steer people away from harmful foods?

Defining Junk Food

Nobody would accuse a stick of celery of being junk food, but an artificial cream-filled cake certainly is. But, there is no clear dividing line between healthy and unhealthy food.

Dr. Sunali Sharma is a dietitian and nutritionist with Amandeep Hospital in Amritsa, India. She gives us the broad brushstrokes of what junk food is: “Commercial products including but not limited to salted snack foods, gum, candy, sugary desserts, fried fast food, and sweetened carbonated beverages that have little or no nutritional value but are high in calories, salt, and fats may be considered junk foods.”

Do French fries count as junk food?

Do French fries count as junk food?

Without a clear and measurable definition, taxing junk food would be fraught with difficulties. Some items are obvious—sugary pop is of little nutritional value and would be taxed, while lettuce, tomatoes, and green onions would escape. But, what happens when you put dollops of high-fat, high-salt salad dressing on those veggies Hamburgers contain protein along with artery-clogging fat. How can a fair tax be levied here?

So, a huge bureaucracy might be needed to decide which foods should be taxed and at what rate. An equally large food industry lobby would likely be created to fight for decisions favouring certain product lines.

The High Cost of Junk Food

One of the major negative effects of junk food is that it frequently leads to obesity, which is both widespread and very costly. The National Health and Nutrition Examination Survey (2017–18) gives us these numbers for Americans:

  • “In 2017–2018, the age-adjusted prevalence of obesity in adults was 42.4%, and there were no significant differences between men and women among all adults or by age group.”
  • “The age-adjusted prevalence of severe obesity in adults was 9.2% and was higher in women than in men.”
  • “Among adults, the prevalence of both obesity and severe obesity was highest in non-Hispanic black adults compared with other race and Hispanic-origin groups.”
  • “The prevalence of severe obesity was highest among adults aged 40–59 compared with other age groups.”
  • “From 1999–2000 through 2017–2018, the prevalence of both obesity and severe obesity increased among adults.”

According to the National League of Cities, “The estimated annual health care costs of obesity-related illness are a staggering $190.2 billion or nearly 21% of annual medical spending in the United States.”

Health Canada puts the cost at between $4.6 billion to $7.1 billion and adds that obesity is associated with “type 2 diabetes, asthma, gallbladder disease, osteoarthritis, chronic back pain, several types of cancers (colorectal, kidney, breast, endometrial, ovarian, and pancreatic cancers) and major types of cardiovascular disease (hypertension, stroke, congestive heart failure, and coronary artery disease).”

The government in the United Kingdom says obesity knocks an average of nine years off life expectancy, and “The overall cost of obesity to wider society is estimated at £27 billion" ($34 billion).

Pigouvian Taxes

Arthur Pigou (1877–1959) was an English economist whose work gave rise to so-called “sin taxes.” The Concise Encyclopedia of Economics notes that Pigou “developed Alfred Marshall’s concept of externalities, costs imposed or benefits conferred on others that are not taken into account by the person taking the action.”

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He said that a company creating pollution should pay a tax to cover the health cost to society of the insult to the environment. On the other hand, people educating themselves should be subsidized, as they are creating a benefit to society.

Taxes levied to compensate society for some sort of negative behaviour are called Pigouvian taxes. The health costs of tobacco and alcohol addiction are, to some extent, covered by the taxes raised on these items. Gambling is taxed in many jurisdictions because addiction can lead to theft to cover losses and family breakdown.

We already tax many items that cause health issues and potential harm to others besides those who consume them.

We already tax many items that cause health issues and potential harm to others besides those who consume them.

Excise Tax

Tufts and New York Universities released a study on junk food taxation in 2018. Researchers concluded that “a federal junk food tax appears feasible based on product categories or combination category-plus-nutrient approaches, using a manufacturer excise tax, with additional support for sugar and graduated tax strategies.”

Consumers would not pay the tax at the point of purchase, but they would pay it anyway because manufacturers would pass it on. However, food companies would no doubt see the benefits of cutting their tax burden by reducing the amount of harmful ingredients in their products.

One of the study’s authors, Renata Micha, RD, PhD, says “Junk food taxes have the potential to substantially reduce the disease burden that results from unhealthy food and beverage consumption in the United States.”

The Junk-Food Tax Downside

Numerous studies, including one by the National Bureau of Economic Research have shown that food price increases take a long time to affect weight. The authors write “. . . that policies raising the price of calories will have little effect on weight in the short term, but might curb the rate of weight growth and achieve weight reduction over a very long period of time.” The time scale here is 30 years.

Also, raising the prices of certain foods through taxes might work against engaging in healthy exercise. A paper published in The Journal of Public Economics in June 2009 suggests higher fast-food prices will cause people to switch to buying raw ingredients and cooking more meals at home. Surely, that’s a good thing. Maybe not, say the paper’s authors. Home food preparation takes more time and therefore leaves less time for exercise, which is a vital component of the battle against obesity.

And, there’s the libertarian argument that the nanny state should not be interfering in the food choices of the population.

What do you think? Should food be taxed according to its nutritional value?

What do you think? Should food be taxed according to its nutritional value?

Bonus Factoids

  • In 2011, Denmark introduced a tax on high-fat foods including pizza and butter, and Hungary imposed a tax on foods with unhealthy levels of sugar, salt, caffeine, and carbohydrates. Denmark cancelled its taxes after massive pressure from the food industry.
  • In 2013, New York City’s mayor Michael Bloomberg proposed a ban on soft drinks in cups larger than 16 oz (473 ml). That’s the size of a “small” pop at McDonald’s. The howls of protest ended in a court ruling that struck down the ban.
  • Until 2012, the 7-11 chain was selling Double Big Gulps sodas measuring 64 ounces (1.9 L). Responding to criticism, the company reduced the size to 50 ounces (1.5 L). The smaller drink is only one-and-a-half times bigger than the average adult’s stomach.

Sources

  • “What Is Junk Food? Why Is It Bad For You?” Sarika Rana, New Delhi Television, November 27, 2017.
  • “Legal and Administrative Feasibility of a Federal Junk Food and Sugar-Sweetened Beverage Tax to Improve Diet.” Jennifer L. Pomeranz, et al., American Journal of Public Health, February 2018.
  • “Junk Food Tax Is Legally and Administratively Viable, Finds New Analysis.” EurekAlert, January 10, 2018.
  • “Overweight & Obesity Statistics.” The National Institute of Diabetes and Digestive and Kidney Diseases. August 2017.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2018 Rupert Taylor

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