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.


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




Stier: Raising taxes on certain foods, drinks does little to fight obesity

Stier: Raising taxes on certain foods, drinks does little to fight obesity

What do Latin American governments do when they realize they are spending more money than they have? In part, they raise taxes on the poor in the name of fighting obesity by taxing food and beverages. That’s only the beginning of the ugliness.

It started last year in Mexico, where former New York City Mayor Michael Bloomberg spent a controversial $10 million of his own money to influence the outcome of a proposed tax on sugar-sweetened beverages and high-calorie foods. The billionaire’s own advocacy group now admits that the money was used, in part, to fund scientists to produce research that would support the taxes, according to both the Associated Press and the Bloomberg Philanthropies webpage. This type of outcome-oriented research may get the job done in terms of advancing a political agenda, but it won’t address obesity.

A recent article in the American Journal of Agricultural Economics explains consumer behavior in the face of such taxes. Lead author Chen Zhen explained, “Consumers can simply substitute a taxed high calorie for an untaxed one.” Reduced consumption of certain foods does not necessarily cause a reduction in obesity.

In fact, Bloomberg food police ally Marion Nestle, food policy and nutrition professor at New York University told Politico last month that, “If the taxes are shown to reduce consumption – and I’m hoping studies are under way – I’d say it’s game over.” The taxes will be adopted across the United States even if the Bloomberg-funded Mexican tax has an impact only on consumption, but not obesity.

Now, after enactment last year of a peso-per-liter soda tax in Mexico, the fad is spreading to other nations of Latin America. Chilean president Michelle Bachelet is enacting a soda tax as part of a wider set of measures targeting foods she doesn’t want her citizens to eat. So is Argentina, as it teeters on the brink of its second debt default in 13 years. In Brazil, where officials increased taxes on sodas, beer and energy drinks by 19 percent to 23 percent over the past two years, revenue-starved officials sought a further tax hike timed to bilk thirsty soccer fans from around the world. At the last minute, the World Cup taxes were given a time out until the fall.

Clearly, the science to support these taxes as a serious anti-obesity tool hasn’t yet been established, despite Bloomberg’s millions. So why was the tax adopted?

Rather simply, it is Sutton’s Law. The “law” is named after the infamous American bank robber Willie Sutton, who was incorrectly credited with answering a reporter who asked him why he robs banks by saying, “That’s where the money is.”

According to Christopher Wilson, an associate at the Mexico Institute of the Woodrow Wilson International Center for Scholars, “Traditionally, 30 to 40 percent of the budget came from oil exports, and that has been declining. That has made for a strong imperative to increase tax collection, which is extraordinarily low as a portion of GDP, and that is the driving force behind fiscal reform,” Wilson told the magazine, Governing, in reference to the food and soda tax. Mexicans spend money on high-calorie food and soda, so Willie Sutton would have taxed it, too.

The problem is, taxes on sugar-sweetened beverages and so-called “junk-foods” have a disproportionate impact on the poor. To Bloomberg, whom nobody could accuse of being poor, this isn’t a bug, it’s a feature. Since there’s a high-rate of obesity among lower socio-economic groups, a sin tax that hits poor people the hardest is right on target.

But there’s more to it than money. Even proponents of the taxes concede they aren’t a silver bullet. Throughout Latin America, advocates are pushing a full menu of laws and regulations aimed at soda and food. At the top of the food police wish-list is a restriction on the advertising of foods they don’t want people to eat. Instead of following the science, proponents of advertising restrictions attempt to advance their cause in a way that makes Bloomberg’s attempt to purchase science look honorable by comparison. Activists in Canada, the United States and Chile are suggesting that advertising to kids is akin to molesting children.

Assistant Professor at the University of Ottawa Dr. Yoni Freedhoff says it most delicately, “We need to stop allowing the food industry to target our most vulnerable and precious population, our children.” New York’s Meme Roth, founder of “National Action Against Obesity” is less subtle in evoking thoughts of child molestation by referring to food advertising to children as “predatory” and arguing that we shouldn’t let food company executives have a “relationship with our kids.”

But it took the chairman of the Committee on Health of the Chilean Senate to put innuendo aside and make the allegation Freedhoff and Roth were too polite to directly state. Senator Guido Girardi, told La Nacion that (as translated by Google), “Chile has companies that are the pedophiles of the 21st century, because they abuse children by labeling fatty and sugary food as healthy.”

In their zeal to advance an unpopular agenda, it’s the food police who have become the real creeps. Advocates who want to fight obesity have their hearts in the right place. But that shouldn’t free them from being held to legitimate science and common standards of decency. With a little less emotionally manipulative rhetoric and a bit more nonpartisan science, we could come together and address obesity in a constructive way.



By Jeff Stier


Please find the whole article here.

Labour says no to a tax on high-sugar food and drink

Luciana Berger

Shadow health minister Luciana Berger this week ruled out the possibility of a Labour government imposing additional taxes on
fizzy drinks and other high-sugar products.

In an exclusive interview with The Grocer, Berger said the party had decided against backing a sugar tax because it would increase food prices and be seen to punish cash-strapped consumers.

“We have never said we are in favour of a sugar tax and I can categorically say that isn’t the case,” said Berger, who this week hosted an obesity debate in Westminster involving MPs, NHS bosses, NGOs and the food industry.

Campaign group Action on Sugar and the National Obesity Forum have recently supported the idea of taxing products high in sugar. But Berger, whose party is
coming towards the end of a review of its public health policy, cautioned against the approach.

“We should not be looking at any food ingredient in isolation,” she said. “Obviously, we have to do something to tackle the obesity crisis and one of the things that we have to look at is sugar. But there is no specific sugar policy. What we are suggesting is limits on the amount of sugar, salt and fat in food and we will be bringing these forward before the next party conference.”

Berger said Labour was also looking at regulation which could stop fast food restaurants such as McDonald’s being located in close proximity to schools and added that “stores like WHSmith which sell a huge amount of sweet confectionery were also “high on our radar”.

The shadow minister, who has been behind an avalanche of parliamentary questions attacking the closeness of the DH to food companies, would not go as far as confirming Labour planned to scrap the Responsibility Deal but said: “It clearly isn’t working.”

Les taxes dites « comportementales » présentent de nombreux écueils, selon une nouvelle étude de l’Institut économique Molinari (IEM)

Les taxes dites « comportementales » présentent de nombreux écueils, selon une nouvelle étude de l’Institut économique Molinari (IEM)

Paris, le jeudi 30 janvier 2014 – Sous prétexte de changer les habitudes de consommation, nombre de nouvelles taxes ont déjà été proposées : taxe sur le gras au Danemark, taxe « Nutella » et taxe « sodas » en France, etc.


Si taxer les « vices » est politiquement attrayant, une telle instrumentalisation de la fiscalité cause toutes sortes d’effets indésirables sans pour autant changer les modes de consommation.


Pas d’amélioration pour les finances publiques


L’argument de l’existence de « coûts sociaux » liés aux comportements à vices, estimés à plusieurs dizaines de milliards d’euros, est avancé suggérant que leur suppression permettrait d’assainir les finances publiques.


Cette idée ne résiste pas à une analyse globale de la question, en particulier si on constate que les personnes s’adonnant à leurs « vices » (tabac, alcool, obésité, etc.) ont malheureusement une espérance de vie moins élevée que les autres.


Ces dernières – par leur mode de vie plus sain – occasionnent de fait des coûts supplémentaires aussi bien en matière de santé que de retraites. Or, ces coûts supplémentaires pourraient contrebalancer voire dépasser les surcoûts générés par les consommateurs de produits « viciés » et empêcher ainsi l’amélioration des finances publiques.


Des études débouchent ainsi sur les résultats suivants :


  • Tabac : en l’absence de fumeurs, les coûts de santé auraient été plus élevés de 7% chez les hommes et de 4% chez les femmes (Pays-Bas).
  • Coûts de santé des personnes non fumeurs et non obèses : près de 28% de plus que ceux des fumeurs et 12% de plus que les personnes obèses (Pays-Bas).
  • Impact financier net du tabagisme : +0,32 dollars par paquet vendu, soit des « économies » pour les comptes publics, sans tenir compte des recettes fiscales liées au tabac (États-Unis).


Enfin, même s’il s’avérait que les vices pesait sur les comptes publics, la raison en est que les gouvernements, en imposant des régimes publics obligatoires notamment en santé, ont supprimé l’évaluation des risques (liés au tabac, à l’obésité, etc.).


Des effets inattendus en matière de santé publique


Si les ventes officielles du produit surtaxé sont susceptibles de baisser, les consommateurs tendent à lui substituer un autre produit tout aussi, voire plus nocif au détriment des objectifs sanitaires affichés par les pouvoirs publics.


Plusieurs études ont mis en évidence de tels effets indésirables :


  • Taxe sodas : effet minime ou inexistant en matière d’obésité, les enfants et adolescents se mettant notamment à consommer d’autres boissons caloriques moins chères (États-Unis).
  • Fat tax : effet de substitution par des achats transfrontaliers et des achats de produits moins chers souvent de moindre qualité (Danemark).
  • Taxes sur l’alcool : effet de substitution par des boissons moins chères et/ou plus fortes; substitution par d’autres drogues (cannabis).
  • Taxes sur le tabac : effet substitution par des cigarettes moins chères; consommation plus intense des cigarettes fumées (plus de nicotine ou de goudron absorbés par cigarette).


La cause du marché parallèle et du trafic illicite


Les taxes comportementales ouvrent automatiquement la voie au marché parallèle, que ce soit sous la forme d’achats transfrontaliers (cas de la fat tax au Danemark) ou d’achats « au noir » qui peuvent représenter 10% du marché de l’alcool au Royaume-Uni, et 20%, ou plus, du marché des cigarettes en France.


Ce n’est pas la nature du produit surtaxé en soi, ou le « vice », qui est à l’origine de la contrebande, mais la fiscalité qui en est la cause nécessaire et suffisante. La preuve en est que dès lors que des produits aussi ordinaires et « vertueux » que le sel (exemple de la gabelle en France) ou le savon (cas de l’Angleterre jusqu’à la moitié du 19ème siècle) sont fortement taxés, ils deviennent rapidement l’objet de contrebande, accompagnée de son lot de crimes, de corruption et de violence accrue.


Intitulée Les écueils de la fiscalité dite « comportementale », l’étude préparée par Valentin Petkantchin, chercheur associé à l’Institut économique Molinari, est disponible sur le site.



AmCham: discriminatory taxation ineffective, distorts competition

AmCham: discriminatory taxation ineffective, distorts competition

This is a summary of the American Chamber of Commerce EU’s position paper entitled “Discriminatory taxation of food and beverages is ineffective and distorts competition”.

The American Chamber of Commerce to the European Union (AmCham EU) supports policies aimed at improving the health and lifestyle of Europeans and we are keen to work with the institutions to find solutions to the problem of increasing obesity rates. However, we feel that attempts by a number of Member States to introduce special taxes on certain food and beverage products are not an effective approach to tackling complex dietary and lifestyle-related issues related to obesity. Furthermore, they may even harm the competitiveness of the EU and national budgets. AmCham EU is concerned about discriminatory taxes applied to the food sector for the following reasons:

  • Food and beverage taxes generate competitive disadvantages;
  • Food taxes are regressive in nature and hit lower socio-economic groups hardest;
  • There is no evidence demonstrating a positive impact of food taxes on the ‘healthiness’ of people’s diets;
  • Punishing specific food products alone would not automatically lead to the elimination of bad diets and lifestyles; and
  • Food taxes hit companies that produce locally and could discourage investment in Europe by both European and non-European companies.

Given the discriminatory nature of taxes on specific food products, AmCham EU believes that they must prove necessary, effective and proportional. As none of the taxes introduced so far have fulfilled these conditions, we would welcome their re-evaluation.

The full position paper can be viewed online here.