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.
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 http://www.institutmolinari.org/IMG/pdf/note0314_en.pdf
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.
The European Commission study into the impact of food taxes on consumption and competitiveness in the agri-food sector was published on 16 July. It aims to support policy making by gathering information on the impacts and effectiveness of food tax measures.
It concludes that when looking at whether “changes in consumption resulting from a food tax actually lead to public health improvements […] evidence from academic literature is inconclusive and sometimes contradictory” (page 13).
The study finds hard evidence from a number of Member States on the negative impact food taxes can have on competitiveness and jobs, leading to an increase in administrative burdens, notably if the tax is levied on ingredients or if the tax base is highly differentiated and complicated.
The study concludes that food taxes in general achieve a reduction in the consumption of the taxed products but that product substitution takes place in particular to:
– “Similar non-taxed or less heavily taxed items”.
– “Cheaper brands of the taxed products, thus potentially not lowering their consumption of the ingredient the tax aims to target (i.e. salt, sugar or fat)”.
– “Other products with similar levels of sugar, salt or fat to those that are taxed”.
The full study can be found here.
Is the food tax becoming an important weapon in the fight against obesity? Such a prospect is not yet on the cards in Belgium. A study at the University of Ghent has found little enthusiasm among policymakers, producers or consumers. To reach their findings, two master’s students in health sciences interviewed 25 key figures in policymaking circles and from producers’ and consumers’ organisations. They have summarised the results of their survey for the database of the Flemish Dissertation Award.
Isabelle Moncarey and Sofie Van den Abeele, two master’s students at UGent working under the supervision of Professors Ignaas Devisch and Lieven Annemans, investigated whether there is support for the introduction of food taxes in Belgium. To carry out their investigation, they interviewed the different stakeholders.
The introduction of food taxes would be a matter for the Federal Public Service (FPS) for Public Health. It is neither in favour of nor opposed to such a measure. It first wishes to examine the possible effect of food taxes, because the consequences are still unclear. Simulations indicate that food taxes can have a positive effect on shopping and consumption patterns. However, the taxes can take various different forms, some of which are rather more effective than others.
As a result of this uncertainty, other government services such as the FPS for the Economy and the FPS for Finance, which in the event of food taxes being introduced would have powers to control the measure, are somewhat sceptical. The producers’ organisations are also critical. Until it has been shown that such taxes work and hence improve public health, they regard them as primarily a fiscal experiment. The taxes would purely be of benefit to the government, which would be able to collect extra revenue. The producers also fear that food taxes would lead to job losses and the stigmatisation of certain products.
The consumers’ organisations are not particularly keen on such a tax either. Their main concern is about the possible social consequences. They fear that poorer families would be harder-hit by the tax, as it would further reduce their limited purchasing power. However, some consumers’ representatives take a more favourable view of food taxes, provided their introduction produces clear health benefits and is supported by awareness-raising campaigns.
“Food taxes will not be introduced in Belgium any time soon. Their effectiveness would first need to be demonstrated, but this would require research into food taxes, and so far there are no concrete plans for such studies. Maybe that will change soon with a new government,” conclude the researchers.
Read the full article here.