Commission investigates Danish ‘fat tax’

Commission investigates Danish ‘fat tax’

On 5 February 2015, the European Commission initiated a formal investigation procedure against Denmark’s so-called ‘fat tax’, which was introduced in 2011 and abolished in January 2013: the European Commission suspects it could be considered as illegal state aid.

The goal of the investigation would be to determine whether food producers who were not forced to add an extra fat tax on their products received illegal assistance.

The tax was levied on meat, dairies, oils and other foods with at least 2.3% of satured fat. The Commission argues that all products with saturated fats should have had the fat tax added.

When abolishing the tax, the government put forward it had created administrative burdens it created, a dramatic rise in border trade and uncertainty among consumers on the real costs of food products.

A full article from Euractiv on the investigation can be read here

Focus on fitness not fatness – Why food taxes are missing the point

Focus on fitness not fatness – Why food taxes are missing the point

Researcher at the University of Essex, children’s fitness expert Dr. Gavin Sandercock writes in BBC news that we have been looking at obesity the wrong way, leaving the harm generated by physical inactivity aside.

 

Dr. Sandercock points out that reports alerting on an “obesity time-bomb” are multiplying. But according to him, the extent of the problem is often exaggerated. Figures from the National Child Measurement Programme for 2010-2011 estimate that 9% of 5 to 6-year-olds are obese, that is, Dr. Sandercock says, 2.7 children out of 30 in a class. It was 1.5 in 1990. He underlines that an “epidemic” is a term corresponding to the increase of one child per class in 20 years and suggests that childhood obesity are somewhat plateauing (25 for 2-5-years-olds boys, 23% for girls between 2003 and 2013).

 

Furthermore, Dr. Sandercock says that public health keeps being focused on food and obesity, and overlooks physical activity. As dietary guidelines vary with time, some propose to tax “unhealthy foods” as a way to tackle obesity. He underlines that we are missing the point by putting the focus on taxes. Healthy eating cannot be the only answer to obesity: physical activity is the key feature to keep in mind.

 

Those observations are corroborated by studies made in Australia in 2011, by the Snowdon report “The Fat Lie” in 2014, and most recently by Ekelund et al. 2015.

 

Quoting the British Heart Foundation 2015 figures, Dr. Sandercock shows that none of 11-15 year-old girls do enough exercise, and only 7% for boys. He calls for 60 minutes of exercise for children and young people each day and praises iniatiatives on physical activity launched around UK. To conclude, he points out that physical activity will not solve all obesity issues, but will benefit to all.

 

The full article can be read here

Molinari Institute Report – Nutrition taxes: a broken tool in public health policy

Molinari Institute Report – Nutrition taxes: a broken tool in public health policy

Recent reports by French senators Yves Daudigny and Catherine Deroche and by Professor Serge Hercberg highlight the public health problems (cardiovascular disease, diabetes and cancer) linked to expanding waistlines. The Hercberg report also notes that, since France’s National Nutrition and Health Programme was launched in 2000, it has not halted rises in excess weight, diabetes or hypertension. The solutions suggested in both reports are based on three lines of analysis: (a) the social cost of excess weight; (b) irrational behaviour by consumers; and, to a lesser degree, (c) social inequalities in health. Instituting new taxes on foods targeted for lower consumption would be the main remedy. Subsidies (financed by these levies) for healthful foods would provide new incentives to encourage their consumption. Nevertheless, both reports note that poor nutrition and its consequences are a complex problem that calls for an entire set of solutions, though they mostly favour tax measures. These are not a panacea, however: their effects on changes in dietary habits are often uncertain, making it hard to pursue the stated goals.

 

Conclusion 
The impact of taxes in reducing the consumption of nutritionally poor foods is uncertain.

While the goals may be laudable (though this is questionable), there is a major risk of applying additional constraints on economic activity without getting the expected public health benefits (in particular, improved results from France’s National Nutrition and Health Program) while nurturing a dynamic of government interventionism that is making French society more sclerotic.  Experts and public authorities tend to depict a black‐and‐white situation, whereas reality is far more complex. Excess weight and the pathologies it leads to are a relatively recent problem in the history of humankind. We still lack the full knowledge that could guarantee an adequate solution.

Although nutrition taxes may appear to provide a response, it is important to understand their limits, especially in terms of a rational approach to avoidance, because the economic costs of these taxes are high in the long run. We should not delude ourselves. In this time of strained public finances, an ulterior motive in the renewed interest in this type of levy is to generate more tax receipts. There are many precedents. President Franklin D. Roosevelt ended the prohibition of alcohol in the United States to boost tax revenues. Due to the Great Depression, Congress had an urgent need for financing, and the best way to get it was to institute taxes on alcohol.

It is always preferable to change the context in which individuals make decisions so that they internalise the externalities they create. In this regard, obesity imposes few or no externalities if individuals bear its costs. We must therefore make sure that incentives for reducing obe‐
sity are in place. Nutrition taxes, by imposing the theoretical frame work of caloric imbalance, would limit the emergence of new ideas that could help reduce excess weight. In the end, we need to show a degree of humility toward the social and biological process. Western society, open and based on free enterprise, dates back only to the late 18th century. It is possible that the human body, after many thousands of years of survival in penury, has not yet adjusted to the abundance generated by capitalism.

 

To read the full report, please follow this link http://www.institutmolinari.org/IMG/pdf/note0314_en.pdf

 

 

 

Inactivity, not calorie consumption, behind rising obesity in the UK

Inactivity, not calorie consumption, behind rising obesity in the UK

New research finds UK’s rise in obesity has been primarily caused by a decline in physical activity

The rise in obesity amongst the UK population has been primarily caused by a decline in physical activity. Using government figures, this new study debunks the popular belief that the rise in obesity in recent decades is the result of increased calorie consumption in general, and sugar in particular.In The Fat Lie, Christopher Snowdon studies evidence from DEFRA, the National Diet and Nutrition Survey, the ONS and the British Heart Foundation, finding that all the evidence indicates that per capita consumption of sugar, fat and calories has been falling in the UK for decades.Despite public health campaigners portraying Britain’s obesity ‘epidemic’ as a result of increased availability of junk food, this conventional wisdom has no basis in fact. People have reduced the number of calories they consume, but have reduced the amount they move around even more.

 

Key statistics:

  • Since 2002, the average body weight of English adults has increased by two kilograms. This has coincided with a decline in calorie consumption of over 4% and a decline in sugar consumption of nearly 7.5%.
  • Of food eaten outside the home, daily calories consumed have fallen from 310 in 2001/02 to 219 in 2012, a drop of nearly one hundred calories per day in ten years.
  • Data for eating out does not go back prior to 2000, but we do know that Britons were consuming more calories in the home in 1974 than Britons consumed in and outside the home combined in 2012.
  • Despite falling calorie intake, average body mass has increased by 5 kilograms since 1993. The crucial missing variable, often overlooked by campaigners, is energy expended.
  • Britons walk an average of 179 miles a year, down from 255 miles in 1976 and also cycle less; averaging 42 miles a year compared to 51 miles in 1976. 40% of people report spending no time even walking at work. The rise of office jobs and labour saving devices means people have fewer opportunities for physical activity, both at work and at home


Key findings:

  • ‘Big Food’ is not to blame

Food supply is a more inviting target for health campaigners than the sedentary lifestyles of the general public. A war on the food industry requires no stigmatisation of individuals and there are a readymade set of policies available which have been tried and tested in the campaigns against tobacco and alcohol.

  • Under-reporting of eating habits does not change conclusions

Although measuring the diet can be difficult because people tend to downplay the amount they eat, the question is not whether people under-report but the extent to which under-reporting has changed over time. It is extremely unlikely people have become so forgetful that the large and virtually uninterrupted fall in calorie consumption reported in successive studies can be explained by misreporting.

  • A one-size-fits-all response is not the solution

The fact that Britons, on average, are eating fewer calories does not mean that everybody is eating less, but we should be sceptical about those who claim that reducing calorie intake across the population will lead to less obesity. That clearly hasn’t happened in the past.

 

Commenting on the report, its author, Christopher Snowdon, said:“The root cause of Britain’s rising obesity levels has not been a rise in calorie intake but a rise in inactivity. With obesity now featuring so heavily in the media it is worrying that so few people know that our largely sedentary lifestyles, not our appetites, have been the driving force behind the UK’s expanding waistlines.

“Campaigners promoting a healthy lifestyle should refocus their efforts towards encouraging exercise and away from a war on food. Anti-market policies aimed at the whole population such as fat taxes will do nothing for the nation’s health.”

 

Fat taxes could hit competitiveness thanks to complex rules says EU report

Fat taxes could hit competitiveness thanks to complex rules says EU report

Taxes on foods high in sugar, salt and fat, do reduce consumption but can lead to consumers simply switching brands or finding other ways to purchase fatty foods while avoiding the tax, according to a new report from the European Commission.

Higher taxes “In general do lead to a reduction in the consumption of the taxed products,” the report concluded. However, consumers can use a variety of methods to purchase the foods they want while avoiding the tax, such as buying similar products that do no fall under same burdensome tax regime or switching brands.

Commissioned by the directorate general for enterprise and industry of the European Commission, the study also argues that fat taxes could have a damaging impact on the EU’s agri-food sector.

SMEs would be particularly vulnerable to fat taxes as consumers switch from premium brand producers to cheaper alternatives. Furthermore, taxes would increase the administrative burden, especially if the taxes are imposed on ingredients or if the rules defining which products are liable under the tax are highly differentiated and complicated.

Director of lifestyle economics at the Institute of Economic Affairs (IEA) Christopher Snowdon, told City A.M.:

It’s a basic economic principle that when prices go up, consumption goes down. But price rises have other effects, as this study shows, such as making consumers buy cheaper brands from cheaper shops. People will go to any lengths to eat the food they like, and that is why fat taxes never have any measurable effect on obesity.

The report’s warnings echo research conducted by the IEA last year on Denmark’s saturated fat tax. The tax had a variety of negative economic impacts including the loss of 1,300 Danish jobs. At least 10 per cent of the revenue generated by the tax was ploughed back into administration.

One survey found that only seven per cent of Danish consumers cut their purchases of butter, cream and cheese while 80 per cent did not change their shopping behaviour at all.

However, some Danes did switch brands, and others hopped over the border to Sweden and Germany to shop for their favourite high-fat foods.

The Danish government had hoped to collect 1bn krone (£115m) from the tax. But the amount raised came in at 1.4bn krone, suggesting that reduced saturated fat consumption was less than hoped for.

At the same time, the tax was in operation the market for crisps and snacks grew rather than diminished. Public opinion turned overwhelmingly against the tax. In October 2012, 70 per cent of Danes considered the tax to be “bad” or “very bad.” The policy was abandoned 15 months after its introduction.

UNESDA, which represents the soft drinks industry, said the Commission study, “finds hard evidence from a number of member states on the negative impact which food taxes can have on competitiveness and jobs, leading to an increase in administrative burdens.”

However, while the study made some initial conclusions, it also found that further research will be needed in order to assess more extensively the impact fat taxes could have on the competitiveness of the agri-food sector.

 

Read the full article here