Through increasing tax on fatty foods, the government could raise substantial sums of money. They could use this revenue to offset other taxes – such as decrease the basic rate of VAT. Therefore, a fat tax could be revenue-neutral (no overall increase in tax revenue).
Benefits of a fat tax
The reasoning behind implementing a fat tax is the hope that people will avoid risky dietary behaviours, improving health outcomes in society. Research indicates that the current obesity epidemic is increasing as a result of the fast food industry expanding.
With obesity and diabetes at record levels, many public health experts believe governments should tax soda, sweets, junk food, and other unhealthy foods and drinks. ... By increasing the price of products that contain sugar, taxes can get people to consume less of them and thus improve nutrition and health.
A fat tax will have very little impact on these diets. Taxes are supposed to transfer wealth from the rich to the poor. Food represents a declining proportion of household expenditure as incomes increase.
noun [countable/uncountable] a tax on foods which are considered to be unhealthy, especially fatty or sweet foods which can lead to obesity or other health problems.
Our results indicate that an increase in taxes on highly processed foods, and thus the price difference between healthier and highly processed foods, could be an effective method to reduce obesity.
High-sugar and high-fat foods are shelf-stable, making them more convenient than food that spoils quickly and giving them a much lower price per calorie consumed. The absence of healthy options in so-called urban food deserts means that taxing junk food will disproportionately harm the people living there.
Taxing unhealthy eatables could cut obesity, prevent heart problems, says study.
A tax on unhealthy foods would encourage people to choose healthier foods which lead to improved health and would help reduce related disease. A fat tax would also encourage producers to supply foods lower in fat and sugar. Fast food outlets would have an incentive to provide a wider range of foods. Raise revenue.
Overall, empirical data from health related food and drink taxes suggest that almost all have been effective in reducing consumption of the targeted product or nutrient. For sugary drinks, this will likely lead to health benefits, though the scale of these is as yet unknown.
Denmark was the first country in the world to introduce fat tax on October 2011 with an aim of reducing the burden of cardiovascular disease. As per the regulation, any food item which contains more than 2.3% of saturated fat will cost an extra 16 krone (US$3) per kilogram.
But there isn't clear evidence on the effectiveness of so called “fat taxes” on changing consumption behavior. New research by Kanishka Misra of the University of Michigan's Ross School of Business shows how a fat tax could work, and help consumers to make healthier consumption decisions.
According to some people, it is important to impose a high tax on junk food to discourage people from eating such foods. In my opinion, this will deter only the middle and lower income groups. To begin with, imposing a higher tax will make fast foods unaffordable to poor people.
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