Denmark has imposed taxes on butter, crisps and mince - now British Prime Minister David Cameron is keen on the idea but the evidence suggests it will not work, says think-tank
It is well known that obesity is a severe, self-inflicted health problem of epidemic proportions in the developed world. It is without doubt that there are medical risks associated with obesity - hypertension, heart disease, type 2 diabetes, cancers and so on. In addition, the obese are more likely to suffer low esteem, social disadvantage and reduced libido. Denmark has imposed taxes on some products - butter, crisps and mince - and British Prime Minister David Cameron, at the Conservative Party Annual Conference in 2011, raised the possibility of a similar tax in the United Kingdom.
Apart from such an intervention being fundamentally at odds with basic Conservative philosophy, such a tax would be most unlikely to have other than deleterious outcomes. Unlike tobacco - calories are not addictive and unlike alcohol, calories are not potentially a cause of violence. Hence to regard them as a harmful product requires some special justification. Consumer ignorance of the adverse health consequences could be put forward as an argument for taxation. It is clear, however, from the abundance of UK government health campaigns, diet plans, health clubs, diet sodas and low calorie supermarket meals that consumers do not wish to be obese and want to lose weight. They are clearly not ignorant.
Another argument in favour of fat taxes could be on the grounds of the obese imposing a disproportionate burden on the British National Health Service. However, against this there is some evidence that the obese have shorter life expectancies and therefore are less likely to require the even greater long term costs of geriatric care. What would the consequences of such taxes be? First, how would politicians know what the optimal tax rate was? Even if they know, such taxes would be an extremely blunt instrument.
Apart from fat taxes penalising people who consume fat responsibly, two American economists reported that a 1 per cent tax on soda would reduce the body mass index by just 0.003. Furthermore, such a tax on 'bad' foods should logically raise the possibility of a subsidy on 'good' foods – vegetables, for example. In addition, these taxes would tend to impact mainly on the poor who are more likely to be characterised by obesity. Such taxes would violate one of Adam Smith's canons of taxation. Moreover, there would be the risk of some racial, gender and cultural discrimination. It is known, for example, that some cultures in the developing world regard portliness as an external sign of affluence and these attitudes may prevail in similar communities in multicultural Britain.
But it is the unintended consequences of such taxes that, perhaps, should signal much caution. Of course, it cannot be known in advance what these consequences might be. Although, there is good evidence from other well intended interventions. Attempts to curb smoking by tax increases on tobacco have been shown to cause smokers to switch to brands with higher nicotine and tar content to maintain consumption levels. And when effective in discouraging smoking, this tended to be accompanied by an increase in obesity.
The uncomfortable truth is that people like and want fat. In the UK, a celebrity chef in a series of TV documentaries showed how school lunches could be made more nutritious within current budgets. Possibly as a consequence, consumption of school lunches declined and in a well-publicised case - mothers in a school in Yorkshire resorted to passing burgers and chips through the school's railings after pupils refused to eat 'healthy' school lunches. In America, a policy of banning the sale of all sugar-sweetened beverages in middle schools resulted in consumption being switched from on school site to off school site. It is not unreasonable to assume that if, say, the British government taxed fast food outlets that consumers would simply substitute and even increase consumption of junk food at home. It should not be ignored either that in these straightened times; there remains the possibility that under the cover of 'promoting good health' - fat taxes could be a cynical ploy to raise revenues.
In conclusion, for many differing reasons, fat taxes are very unlikely to have the desired effects. The private market is already responding to the demands of people wishing to lose weight. If there is a role for governments in this area, it should be limited to promoting health information campaigns. These are cost effective, have proved successful in other areas and do not come with the disadvantages of trying to micro manage the nations eating habits.Barrie Craven is a PhD associate at Newcastle University, in the United Kingdom, and author of the Institute of Economic Affairs paper Fat taxes and other interventions won't cure obesity