Junk food tax: a solution to obesity and chronic health issues?
In 2003 the World Health Organization reported the price of unhealthy foods could be a contributor to obesity, so adjusting the cost could motivate consumers to change their food choices. Enter stage right junk food taxes. Additional taxes on sodas and potato chips have been popping up around the US, leading the debate to a federal junk food tax.
My interest in food taxes was piqued when Chicago, my hometown, repealed their soda tax two months after it was implemented in 2017 citing legal and administrative problems. Scanning the social media trolling, one user commented: “Soda tax. What’s next, a junk food tax!?” Discuss, shall we?
A “sin” tax seems to be one way to reduce a behavior. It’s worked as one method to reduce smoking consumption – for every price increase of cigarettes by 10%, demand decreases by about 4% in adults in high income countries. A recent Vox article addressed whether the US government should consider a general junk food tax. The article described junk food and beverage taxes in Mexico and Hungary as examples. Mexico approved a tax in 2013 on foods containing 275 calories per 100 grams like sweetened drinks, chocolate, ice cream, cereal and (strangely) nut butters, putting the revenue toward social development programs. Hungary taxed packaged foods with high amounts of salt, fat and sugar in 2011 to fund health services.
Vox concluded junk food taxes result in lower consumption of the foods taxed and the imposed taxes could be one method to improve diet in the US. What Vox missed is that US taxpayers already support the production of junk food via the farm bill. Tamar Haspel for the Washington Post writes about the farm bill and what Americans actually pay towards junk food production. Even though it’s a matter of half pennies, consumers likely won’t support paying for the farm bill and an additional federal junk food tax. That’d be double taxation. Philadelphia enacted a soda tax of 1.5 pennies per ounce, adding 18 cents to a 12 ounce can of soda. Despite this nominal increase, the tax remains controversial. So is this an option for the US?
A recent scientific article pulled data from 13 studies from January 1 2012 to February 28 2017 to look at already existing taxes, to explore the legal and administrative practicality of a nationwide junk food tax. There are currently nine active junk food tax bills and/or laws at the state and tribal government level: Hawaii, Maine, Maryland, Minnesota, the Navajo Nation, New Mexico, New York, Texas and Vermont. The foods taxed range from snack foods, “minimal-to-no nutritional value” foods or packaged foods containing sugar. There are taxes at the municipal level too but they’re on sugar-sweetened beverages and some were proposed but not enacted.
Based on the current legislation, the study identified four categories of possible taxes. The categories were based on 1) product category (drinks, snack foods), 2) nutrient criteria cutoffs, 3) specific nutrient content (saturated or trans fats) or calories, or a combination of the previous. Another possible category was by degree of processing (carbohydrate vs vitamin content) but this method was not supported by previous literature. Determining these categories brings up tough further questions, like what determines degree of processing or what about naturally occurring vs added sugar? This further reminds me of calls for a meat tax – taxing animal meat as one way for consumers to reduce the animal products in their diet, reduce greenhouse gas emissions and discourage producers from giving their animals antibiotics.
The researchers then looked at federal tax authorities to determine whether a sales or excise tax would be more practical. Sales taxes are paid by us, the consumers, and the revenue ends up in the general treasury and is used to fund the government. Excise taxes are typically paid by companies (producers and importers), distributors or sellers. This money can be tagged and used for specific purposes. An example this is the tax we pay on gasoline and the revenue goes to the Highway Trust Fund to pave our roads and build our bridges.
Given the current tax policies and obstacles, the researchers concluded the easiest form of tax to implement would be by product category. It could specifically target popular foods or foods notoriously “junky” like frozen breakfast meats (sausages) for example, and is the more popular kind of active food tax. Since a majority of existing taxes are by category, they determined it would be easiest to implement since it’d be in line with what’s already in place.
However this method could also capture neutral foods in certain product categories, like Denmark taxing cheese under their failed 2011 saturated fat tax. (This makes me a little sad because I love cheese and despite cutting it completely out of my diet this past year, I will never stop loving it.) Plus, there’s no incentive here for manufacturers to reformulate their products, which is where junk food comes from.
There was additional support for a graduated tax strategy - increasing the fee as the nutrition quality decreases. This would be a good fit for products with added sugar. It’s similar to how wine is taxed - wines less than 14% alcohol by volume is taxed at $1.07 per gallon, whereas more than 14% but less than 21% alcohol by volume is taxed at $1.57 per gallon and so on. . This method could also encourage manufacturers to reformulate, especially if it’s the food manufacturers who have to pay the excise tax. From an administrative perspective, the study supported using an excise taxes on manufacturers as they are already regularly in use, and if the manufacturers are the ones who have to pay, they could be nudged to change their products. And probably claim they changed their products to help Americans eat healthier and that it had nothing to do with the tax.
As I write, Britain is enacting a soda tax in April 2018 with rave reviews from public health experts through a graduated tax strategy. Coca-Cola has already reduced the sugar in their Fanta products, as well have other English brands. Coca-Cola is claiming the reformulation was already planned to help consumers eat healthier and had nothing to do with the tax. However, in the US a graduated tax method would require more steps to implement compared to a category tax, since there would be additional work needed to identify the graduation steps and track compliance as products on the marketplace change their nutrition content.
Considering these taxes bring up issues of ethics, poverty and food access. “Sin” taxes on alcohol or junk food, formally known as regressive taxes, charge the same amount to everyone regardless of their income, so low-income populations will pay a greater proportion of their income toward the tax compared to higher income groups. A 2017 study investigated the concept of food swamps, areas rich in unhealthy fast food and junk food vendors. They found living somewhere with a food swamp is a greater predictor of obesity, and that lower-income and minority groups are more likely to live near food swamps. Conversely, food taxes would be targeting those who are more at risk of chronic disease. Franck et al propose the revenues from such taxes could later offset costs to be used as subsidies towards healthy foods or other public health initiatives.
It’s unclear whether these taxes will help or hurt low-income groups. Early research shows these taxes could have an affect on consumer purchasing patterns. Would Supplemental Nutrition Assistance Program recipients be negatively affected by having to pay an additional fee, when they are receiving SNAP because they’re unable to afford food in the first place? One observational study showed soda consumption dropped 21% in Berkeley, CA and another found low-income households in Mexico bought 10% less than expected of taxed junk foods. In theory, low-income groups would respond more to a price hike, but one study based their assumptions about purchases in the US on cigarette purchases in the UK from the 1990s - a different country and decade where attitudes towards smoking might not apply today.
A 2013 article Taxing Junk Food to Reduce Obesity concluded a small pre-sales tax would have little impact on obesity, whereas a high tax may influence consumers’ health but could be controversial and politically unpopular. They found high taxes greater than 20% would most impact adolescents, lower-income populations and people at risk for obesity. They summarized that the more important influence on a junk food tax’s effectiveness isn’t the amount of the tax but the success of combined health initiatives or programs.
A junk food tax may not be the single answer to reducing America’s health problems, but could be put in place as part of the lifestyle change and policy solution.
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Editing credits to:
Austin Robinson, PhD
Nutrition Writer’s Group