Fat tax

To combat the rising rates of obesity worldwide, several countries have proposed charging taxes on certain food and beverage products. A fat tax is applied to foods and beverages deemed unhealthy and containing a specific amount of fat, salt, or sugar.

A fat tax is a type of Pigovian tax or sin tax. Lawmakers apply these types of taxes to products such as cigarettes, alcohol, coffee, tobacco, and soft drinks, which are deemed to have negative consequences for a society. Many lawmakers typically view these items as unnecessary for survival. They also consider them to be unhealthy and morally questionable. The purpose of taxing these items is to discourage people from using these products, as well as to increase revenue to offset rising healthcare costs associated with the consumption of these products. Analysts argue whether taxes such as these actually curb people from purchasing these types of items.

Obesity

According to the World Health Organization in 2024, one billion people worldwide were obese—about one in every eight individuals. People who are overweight have an excessive amount of body fat. In people who are obese, this excessive body fat poses a health risk. More than one-third of all Americans are obese or overweight. The United States has the highest percentage of obese people in the world, although the number of people with obesity has risen globally since the early 1990s. Some studies indicate that more than 50 percent of the world's population will reach body fat levels classified as overweight or obese by 2035.

According to the National Institutes of Health, being obese puts people at risk for higher rates of heart disease, high blood pressure, diabetes, stroke, cancer, and other health conditions. In addition, being obese causes financial strain. The United States spends more than $190 billion per year on health care for obese people, according to the Journal of Health Economics. This amount, which continues to rise along with obesity rates, has caused lawmakers to develop new ways to target obesity. The enactment of fat taxes is one method both researchers and lawmakers have proposed as a potential way to curb obesity rates.

Fat Taxes Worldwide

Kelly D. Brownell, a professor of psychology at Yale University, was one of the first people to come up with the concept of a fat tax, also called the Twinkie tax, in 1994. In an article in the New York Times, she proposed that the United States implement a 7 to 10 percent tax on unhealthy foods along with a subsidy on healthy foods that would be offset by revenue from the fat tax. As obesity rates skyrocketed throughout the world in the 2000s, others suggested taxing foods high in fat and sugar, just as products such as cigarettes and alcohol are taxed. They argued that consuming unhealthy foods posed just as much risk as smoking and drinking.

In an effort to combat the country's rising obesity rates, Denmark became the first nation in the world to pass a fat tax in October 2011. The government applied taxes to items such as butter, milk, cheese, pizza, meat, oil, and processed foods containing more than 2.3 percent saturated fat. The goal of the tax was to lower Danes' consumption of fat by 4 percent. Consumers complained about higher food prices, and food companies complained about increased administrative costs. By November 2012, the Danish government had abolished the tax, citing it was not meeting the proposed goals. It also cancelled plans for a proposed sugar tax. The British Heart Foundation's Health Promotion Research Group concluded that to succeed, the fat tax in Denmark would have needed to be at least 20 percent and that Denmark should have paired it with a subsidy on healthy foods to make an impact.

Denmark's plan inspired several other countries to enact fat taxes. In 2011, Hungary, where about two-thirds of all citizens are overweight or obese, began to roll out taxes on energy drinks and prepackaged foods and beverages that contain high levels of salt and sugar. Hungary's goals were to deter citizens from making unhealthy choices and to raise revenue to fund the country's health system. France and Mexico soon followed suit and began taxing beverages such as soda. French lawmakers also proposed a tax on foods containing palm oil. Dubbed the Nutella tax after a chocolate-hazelnut spread that would be affected by the tax, the measure did not pass. Countries such as Finland, Britain, Ireland, Israel, and Romania also considered the passage of similar fat taxes.

Although the conversation about fat taxes had started in the 1990s in the United States, it was not until the 2000s that the country implemented its first fat tax of sorts. Michael R. Bloomberg, the mayor of New York at the time, spearheaded an effort to ban trans fat; this became a reality in 2006. He also mandated that restaurants list calories on menus in an effort to convince New Yorkers to make healthier choices. Bloomberg's biggest effort, however, began in 2012 with a proposed ban on soft drinks larger than sixteen ounces. After much debate and years of fighting appeals of the ban, the New York State Court of Appeals rejected the soda ban in June 2014. In November 2014, lawmakers in Berkeley, California, passed legislation to tax soft drinks, making it the first US city to pass a sugar tax. Similar efforts were considered in other cities, such as San Francisco, where the measure failed to pass in November 2014. By 2024, sixteen countries had implemented a fat tax. They included the United States, Mexico, Canada, Hungary, Denmark, the Netherlands, Singapore, and New Zealand.

A 2024 study analyzed the effects of twenty other studies conducted worldwide on fat taxes. It found that, in general, fat taxes work and cause consumers to avoid purchasing the unhealthy food. The study also found that such taxes affect lower-income households to a greater degree; taxes on less healthy foods combined with subsidies to lower the cost of healthy foods worked better; and taxes without subsidies sometimes only served to generate tax revenue without any corresponding health benefits.

Bibliography

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