INTRODUCTION
The leaders at the UN General Assembly are in consensus on the need for tangible actions to combat illnesses that are not transmissible. One of the four major causative risk factors for which is an unhealthy diet.[1] This unhealthy diet, characterized by overconsumption of calories is the major cause of obesity.[2] The market is burdened with the responsibility to deliver the ideal amount of good for the well-being of society. Price is an essential factor in determining people’s food preferences and it is widely acknowledged that diet has a major influence on mortality and morbidity. For this reason, to overcome the current obesity epidemic, government intervention is required. The market forces have proved to be insufficient. People are unable to form a connection between diet and disease, along with their inclination towards short-term gratification. Not paying the consolidated social cost for their food choices has further led them to neglect what they are putting on their plates. [3]
The health burden arising due to diseases caused by obesity is borne by society. It is required that this additional cost to society is turned into the private costs of the causing individual[4]. For this, a fat tax can be levied by the government. A fat tax is a tax or surcharge that is placed upon fattening food, beverages or on overweight individuals.[5] The theory behind the fat tax is rather straightforward: provide people with economic incentives to better choices. The modern concept of food taxes was given by Kelly Brownell, who had observed that low-nutrient, high-fat food was cheaper than high-quality, low-fat food.[6]
Consumption of unhealthy food may not always be a choice. According to a study done by Drewnowski and Specter, after comparing cookies with fresh carrots, a huge difference in their energy cost was observed. Cookies were 20 cents/MJ, while carrots were at 95 cents/MJ. Similarly, energy cost of carbonated drinks was 30 cents/M J, whereas it was 143 cents/MJ for orange juice from concentrate[7]. These foods are the favoured choice because they also impart higher than average amounts of neurobiological reward, including sensory enjoyment and pleasure. Due to these foods’ high palatability and financial advantage, the poor may favour their intake.[8]
EFFECTIVENESS, FEASIBILITY AND ACCEPTABILITY
According to a study conducted by Powell and Chaloupka, BMI or obesity levels are not going to be affected by small taxes or subsidies. Non-trivial Pricing interventions are required to see a significant change. Their study showed that there was a significant relation between food and prices and change in obesity levels, though generally small in magnitude, were large in certain cases like for low-socioeconomic status groups along with those at risk for overweight or obesity.[9] Although small changes do not produce statistically significant results, they can lead to meaningful changes. According to studies, if VAT (at 17.5%) is extended to unhealthy foods in the UK, it can lead to a 1-3% reduction in the presence of ischaemic heart disease, which would result in 900-2700 fewer deaths per year[10].
Although these taxes could be based on the nutrient content present (i.e., Nutrient Tax), it would cost the administration less to tax specific food groups, especially those which are not high in nutrients. These were called Composite Commodity Fat Tax by Clark and Dittrich. A drawback of this type of tax is that when items under a broad category are taxed, higher prices of some essential items could lead to a lack of certain nutrients and cause-related issues. For example, higher beef prices could cause a higher incidence of anemia [11]. The Nutrient Tax overcomes this but does not take into account the relationship between obesity and nutrients which is of cause and effect. Fat is not the only reason, sugar could also be the nutrient that needs to be taxed. To resolve this issue, they gave Nutrition Index Fat Tax which does not disregard that obesity is not caused by a specific nutrient.[12]
When people were told that the revenue collected from this tax would be spent on funding health education and programs to prevent obesity, people showed moderate acceptance, as evident in several polls. However, there is opposition from the food industries, convenience store associations and restaurants.[13] Therefore, the general acceptability of these taxes is low.
CRITICISM
When the fat tax is compared with the tobacco tax, a striking difference is seen, making it unfit for comparison. Fat taxes are levied on everyone, even those who are not obese, whereas tobacco tax is only on smokers. We know that excessive fat consumption causes obesity, however, we cannot be sure if, in the case of a particular person, fat is the main cause of obesity. Lack of exercise could also be a reason.
Studies show that obese people are less likely to be affected by changes in food prices than normal-weight people, which would mean that the fat taxes would not tackle obesity but only help in preventing it from increasing. According to Clark and Dittrich, the existing fat tax system failed to take into account individual factors like age and gender which cause obesity, substitutions among food groups ( for example, substituting soda with sweetened tea), relations among nutrients in separate foodstuffs (e.g. an item which is low in fat but high in sugar content) and whether the presence of certain nutrient ensures its consumption ( for example, before cooking, fat from the meat is removed). Another issue with these rights is whether the government is excising excessive control over the free choice of its citizens.
Furthermore, these taxes do not affect the poor and the rich equally. Its impact on the poor is considered to be regressive[14]. The poor are required to pay significantly more since they have a higher proportion of taxed foods in their diets along with food taking a major portion of their income. To offset this imbalance, the money generated by these food taxes could be used to raise funds to subsidize healthy foods or help in the industry’s reformation of food. These could lessen the regressive nature of food taxes along with maximizing health gains.
SITUATION IN INDIA
According to the Lancet Study, 40% of women and 12% of men were abdominally obese[15]. In India, Kerala was the first state to levy a food tax. It introduced a tax of 14.5% in 2016 on fattening foods for the reason that the public was least opposed to it. Since it was targeted at large food chain corporations like Mcdonald’s and KFC, the low-income population wasn’t affected. [16] In 2022, the central government introduced new tax slabs. Non-branded items would be subject to a 5% GST, whereas branded items would be charged 12% GST.[17]
CONCLUSION
For the fat tax to be successful, taxation must be non-trivial, along with covering a wide range of food items that are classified as unhealthy. They also need to be combined with subsidies for healthy foods. Heath behaviour reforms are required for three reasons. First, health must be valued for its own sake. Second, there should be a fair distribution of the burden caused by illness. Third, maintenance and improvement of the general welfare, since the health of a nation directly impacts its economy and allocation of resources.[18] The food industry would naturally consider consumption taxes as unfair, redundant, ineffective, and damaging to the industry. According to their argument, it leads to people losing their job. A similar argument was given when tobacco was taxed. However, considering the rising obesity rates, a fat tax is the need of the hour.
Author(s) Name: Noorbir Kaur (Rajiv Gandhi National University of Law, Patiala)
Reference(s):
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[3] Kelly Brownell et al, ‘The public health and economic benefits of taxing sugar-sweetened beverages’ (2009) 361(16) NEnglJ Med. <https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3140416/> accessed 9 July 2023
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[17] ‘Government to impose tax on unhealthy food items to tackle obesity’ Times of India (3 March 2022) <https://timesofindia.indiatimes.com/life-style/food-news/government-to-impose-tax-on-unhealthy-food-items-to-tackle-obesity/photostory/89946430.cms?from=mdr> accessed 10 July 2023
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