Wait, we might have to pay even more around the holidays? A report released by a U.K. restaurateur has caused a stir, as it aims to make sugary products more costly in the pursuit of keeping its citizens healthy. But does taxing food affect our purchase decisions, and ultimately, our health?
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It’s no secret that poor dietary habits have real – and unpleasant – consequences. But what can be done? What’s the best approach to helping people everywhere make better food choices?pr
What’s going on in the U.K.?
U.K. restauranter, Henry Dimbleby, was commissioned by the U.K. government to independently review their entire food system. While it began as an analysis of the strengths and weaknesses from farm to fork, they particularly focused on issues of hunger and ill-health brought about by Covid. Their National Food Strategy was written as an extensive analysis of the various food issues facing consumers, along with a set of specific policy recommendations designed to deal with them.
The “Dimbleby Report” has brought to light the already heated debate on the “right” food policy for a modern world. One of their recommendations was to put a sugar tax on foods since too much sugar can contribute to obesity and poor health. As the report notes, junk food contributes to 64,000 deaths each year in the U.K. In the United States, medical expenses to combat obesity total over $150 billion, sometimes reaching $210 billion a year. The report suggests simple economics as a possible solution, in the form of new taxes on the sugar and salt common to unhealthy food.
The U.K. also recognized that the answer to decreasing obesity doesn’t lie in one simple approach to food policy. It demands a comprehensive set of tools for leading citizens to a better, healthier future – one that accommodates the nutritional and economical needs of people and the maintenance of a sustainable food system.
U.K. Prime Minister Boris Johnson immediately announced his opposition to the tax proposals. And in the United States, critics of the “tax the sin” approach pointed to the controversial results of similar attempts to tax sugary drinks. So that leaves us with one question: What works best to create consumer behaviors leading to healthy people: a punishment or a reward for better decision-making?
The National Food Strategy Report – The Evidence, July 2021.
What is a sugar tax?
A sugar tax is a surcharge that’s levied on sugary foods and beverages, including soda, candy bars, cereal, etc. The Dimbleby Report is also considering a salt tax, designed to reduce the consumption of chips and other salty snacks and junk food.
There are different ways to impose this tax, including taxing per ounce or adding a percentage of the cost. Ireland imposed a soda tax in 2018 with 30 cents per liter added to any sugary drinks with more than eight grams of sugar per 100ml.
The Dimbleby Report proposes a tax of about $4 US per 2.2 pounds of sugary and salty foods. This kind of tax would raise over $4 billion US. But where will the money go? It said that some will provide fruit and veggies to low-income communities, but how realistic is this?
And who is this tax targeting, realistically? It’s no secret that sugary, salty, processed junk foods are cheaper than fresh fruits and vegetables, making them staples for low-income consumers. For example, a Mediterranean meal for two of salmon, quinoa, and broccoli could cost up to $20 or more. While a box of mac and cheese for two only costs as little as 98 cents.
18% of the U.K. population is considered low-income and 20% of working-age adults are considered living in poverty, plus 30.7% of children. This is much more than the 10.5% poverty rate in the U.S.
In fact, the Food and Drink Federation predicts that poor families will face an 11% annual increase in their grocery costs. This is equal to the total amount they spend per year on fresh vegetables.
Could it actually work?
Simply put, maybe. It could work in the short term if the tax was high enough, but no one wants that. Philadelphia imposed a tax on sugary drinks that increased their prices by almost 2 cents per ounce. Researchers found that the purchasing of these taxed drinks went down 39%. They also found that there was even more of a drop in neighborhoods with higher rates of chronic diseases.
However, only two months after the tax was put into effect, both grocery stores and distributors announced that they had to start cutting jobs and laying off employees because of the drop in sugary drink purchases. Pepsi laid off almost 100 employees and blamed the tax for it. It was also unclear if people were traveling outside the city to avoid the tax.
The city of Philadelphia faced even more trouble in 2016 when the American Beverage Association, several business owners in Philadelphia, and others filed a lawsuit against the tax because it went against the “Tax Uniformity Clause.” The case was dismissed in the end. New York even attempted to put a similar law in place to tax sugary drinks, but lost in court.
A study published in the British Medical Journal in 2013 estimated that a 20% tax would lead to a reduction in the prevalence of obesity in the U.K. of 1.3%, or around 180,000 people, with the greatest effects occurring in young people. They also reported that there would be no significant differences between income groups. But I wonder…how?
A tax of 20% is no small feat, especially for the economically disadvantaged, which we already know takes up a large portion of the U.K. population. This proves the point that for any real change to occur, a much higher tax is needed…
…a tax that no one wants and the economically disadvantaged can’t afford.
There is also a parallel here to tobacco taxes. Currently, the federal cigarette tax in the U.S. is $1.01 per pack. Despite this sizeable added cost to the consumer, there are still over 34 million adults and 1 million teenagers who smoke in the U.S. If people are still buying cigarettes now, even with this astronomical tax, do we think they won’t pay a little more for a candy bar, a bag of chips, or a bottle of soda?
Also, using a tax to persuade people to quit smoking is much different than using it to take food away from those who may not be able to afford anything else. The study above states taxes will work especially with low-income communities, but is our goal really to punish people for making food choices that sometimes are the only ones that can make?
What’s ‘the carrot’, then?
In lieu of a tax, a strategy proposed in 2020 by the U.K.’s Department of Health and Social Care was designed to decrease obesity and help the population fight Covid-19. This is similar to Chile’s successful campaign to combat obesity. With Chile’s stop-sign method, consumption of sugary drinks decreased by about 25% in the first 18 months.
This all-channel strategy included:
- A ban on advertisements for junk food before 9pm online and on television
- Ending “BOGO” sales in grocery stores on unhealthy foods
- Displaying calories on menus
- Showing calories for alcoholic drinks
- Expanding weight management services through platforms, like self-care apps
- Putting nutritional information on the front of food packages with a ‘traffic light’ system to encourage consumers to make healthier choices
Would a stop sign stop you? The Chilean Food & Advertising Law in effect, as shown within red circles above.
What are some other solutions?
There are solutions that don’t involve punishment or telling people what to eat. Here are some possible solutions to decreasing the obesity rate:
- Using an app to incentivize consumers to choose healthy foods. Boris Johnson proposed an alternative to Dimbleby’s report that includes creating an app consumers can use. When consumers make healthy food purchases, like fruits and veggies, they’ll accumulate points on the app. The points can then be used for discounts, free tickets, and more rewards. The app will also track calorie consumption and physical activity.
- Labeling policies have been shown to lead to greater impact than federal policies in Latin America. For example, Chile imposed a “stop-sign” method, where unhealthy foods had a black stop sign on them to decrease purchasing. In just two years, it led to a 24% decrease in the consumption of sugary drinks.
- Making fruits and vegetables cheaper and easier to prepare. Along with the sheer cost of fresh fruits and vegetables, some families also don’t have the time to cut, peel, and prepare. Cheaper and more accessible frozen and pre-chopped produce could allow consumers to purchase them.
- Early Education. Of course, the best way for consumers to eat healthier is through education. Knowing that we need to eat to be healthy and live a long life is incredibly important and should be taught at a young age. This is why we’ve partnered with the Farm Journal Foundation on an education initiative to teach students about nutrition, global food, and agriculture.
- Ending BOGO sales. We don’t really see many ‘buy one, get one’ sales on produce, but a lot on chips, candy bars, and other snacks. By ending sales of unhealthy foods in grocery stores, consumers may be less likely to purchase them or purchase as much.
- Advertising Policies. Creating stricter guidelines for junk food and sugary drink advertisements may also decrease consumer purchasing. It is the old, ‘out of sight, out of mind’ trick. If we don’t see junk food, we’ll be less likely to think about it and crave it, therefore we won’t purchase it as often.
The Bottom Line
A tax on sugary and salty foods does not incentivize many people to eat healthier and it will not get rid of the obesity epidemic. There are many other possible solutions to change consumer behavior that does not involve punishment for decision-making. As always, it’s never just one solution, and we need more than a quick fix to make real change.