There are strong economic arguments in favour of taxing tobacco and alcohol, which have negative externalities, but the economic argument for imposing food taxes is less strong, said Annalisa Belloni, Health Policy Analyst at the OECD (Organisation for Economic Cooperation and Development). Taxes on sugar-sweetened beverages may be more justified than on other foods, she added.
The OECD official presented results of modelling work showing that the combination of subsidies decreasing fruit and vegetable prices by 10% and taxes increasing the prices of foods high in fat by 10% have a sizeable impact on health. Among the policy interventions studied, fiscal measures were the second most effective intervention in reducing morbidity and mortality and are the only intervention likely to generate savings in healthcare expenditure that exceed the intervention cost.
Belloni also addressed the main arguments against food taxes: inelastic demand, regressive effects, and negative impacts on the domestic economy due to their impact on cross-border trade. Inelastic demand implies that introducing food taxes would cause a modest change in consumption. However, from a public health perspective, an inelastic demand is desirable, because it means that consumers will not substitute the taxed items with other commodities, producers will pass on to consumers the entire amount of the tax and the welfare loss resulting from the introduction of the tax is small.
Lower-income households spend a greater proportion of their income on food than higher-income households, said Belloni, urging governments to take this into account in the design of any taxes. However, she added that disadvantaged socio-economic groups will benefit the most in health terms.
The food industry is convinced that obesity and non-communicable diseases (NCDs) are complex, multi-factoral issues caused by a combination of up to 150 risk factors including food consumption, individual psychology, tobacco use, unhealthy diets, physical inactivity and harmful use of alcohol, said Mella Frewen, Director-General of FoodDrinkEurope.
Industry does have a role to play and is a proactive partner in combating these problems, said Frewen, explaining that FoodDrinkEurope is a founding member of the EU Platform on Diet, Physical Activity and Health.
Commitments made by FoodDrinkEurope around core business activities include reformulation and innovation (for example, reducing portion sizes and reducing salt/saturated fat content), consumer information (for example, front-of-pack nutrition labelling and Guideline Daily Amounts), and responsible marketing practices (for example, promoting children’s healthy lifestyles and encouraging companies not to advertise to children below the age of 12), she said.
Frewen argued that food taxes are regressive, discriminatory and distortive. Moreover, she insisted that there is no conclusive scientific evidence proving that they are an effective means of changing consumer behaviour or successfully tackling obesity.
Remember that behind any number that you see on slides there are real people suffering – we tend to forget that in the Brussels discussions, said Roberto Bertollini, Chief Scientist and WHO Representative to the European Union.
The World Health Organization official warned that the cost to individuals, families, communities and health systems of obesity and problems related to inappropriate diets are borne by all of us and society at large.
Bertollini argued that advertising to children that does not follow ethical principles can contribute to promoting the abuse of sugar and unhealthy diets. He called for the creation of enabling environments that allow them to lead healthier lifestyles, and argued in favour of addressing salt, sugar and trans-fats in a way that promotes – rather than forcibly changes – nutritional habits.
Food taxation can certainly play a role in a comprehensive approach alongside other measures, he argued. But it should be used wisely – not to impose on people certain products or behaviours, but to facilitate certain changes, he said.
Despina Spanou, Director for Consumer Affairs at the European Commission’s Directorate-General for Health and Consumer Affairs, said that the Commission cannot say much regarding taxation, because it is up to the member states to do whatever they think is right. But the EU executive does not pretend that it cannot see what is happening, she added.
The Commission recognises that obesity is a problem, said Spanou, adding that the EU nutrition strategy was adopted in 2007. This strategy demonstrates the Commission’s view on how to tackle the problem of obesity: through a holistic approach that is not just about legislating in areas like labelling and health claims, but also about bringing together all stakeholders who can help to do something about the problem.
If you’re going to collect money with food taxes, then you need to use it for the right purpose, argued Spanou, adding that the taxes must also have a long-term positive health impact.