Fat tax

By Bridget Gourlay

In the 1960s we started to crack down on cigarettes. Despite the best efforts of multi-million dollar tobacco lobbyists, it was becoming obvious there was a direct link between smoking and lung cancer, as well as a whole host of other nasty diseases.

Successive governments sprung into action. In 1963, smoking ads were banned. Ten years later, it was the law to have health warnings on all cigarette packs. Smoking was gradually outlawed in movie theatres, schools and aeroplanes. Special sections for smokers were put in place in restaurants, until it was stubbed out completely in 2003.

The reason for it was that smoking was dangerous to our health. So, the argument goes, why don’t we do the same for obesity?

Sure we have campaigns about the importance of exercise and healthy eating, but a glittering display of junk food is available everywhere we go. Filling up petrol? Pies, coke, sweets are all available at the counter. It’s the same with the supermarket. Local dairies and fast food chains are found in most suburbs. All this and we have rising obesity rates that are, if you’ll excuse the pun, weighing heavily on our health system. Statistics show three in ten children and six in ten adults are overweight or obese.

This health crisis costs $460 million to our health system every year, but also hits the nation’s pocket in indirect costs such as lowered productivity rates.

Denmark recently introduced a ‘fat tax’ — hiking the GST on everything which has 2.3 percent or more saturated fat. Fellow European country Hungary has done the same, with a slightly different system, taxing foods with high levels of fat, sugar or salt. Even Tory Prime Minister David Cameron was recently quoted in the Guardian as looking into following suit.

Les Mills CEO Phil Mills says the junk food industry is getting a free ride and needs to pay its true cost. “Around the world, tax shifting is at the cutting edge of macro-economic policy. It discourages harmful industries, pays for the damage they cause and creates markets for better products. In Germany, for example, a switch from taxing income to taxing non-renewable energy created 250,000 new jobs in the renewable-energy sector and reduced CO2 emissions by 20 million tons. It works.”

Mills says that in one study of vending machines, sales of low-fat snacks increased by 80 percent when the price was halved. In another, sales of carrots doubled in high schools when the price was lowered. In China, increasing the price of fatty pork by 10 percent reduced people’s fat intake by up to 11 percent.

“Right now, we pay the difference between the nominal price of junk food and the rapidly increasing cost to society. That simply isn’t fair.”

Not in NZ

But New Zealand won’t be following in Europe’s footsteps anytime soon. Health Minister Tony Ryall told Auckland Today the Government has no plans to introduce fat taxes. “Such a tax would add to the burden of many families in tight economic times.”

The Food and Grocery Council’s Katherine Rich says fat taxes give the impression that all fat is evil, which she says is absolutely not the case. “The issue is how much any one person consumes and whether this is balanced with physical activity… education about healthy lifestyles which balance food intake with activity is the only key to people understanding how to feed themselves and their families.”

Fight the Obesity Epidemic’s Dr Robyn Toomath says Rich’s comments are outrageous. “Education is the only thing we’re doing, and doing pretty poorly. Obesity is getting higher and higher, there’s no justification in saying that at all.” Toomath says we could start with a simple sugar tax, such as a soft drink tax if we want to start making junk food pay for its true cost and make it more expensive than healthy food.

“Taxes can be more sophisticated. There’s very sophisticated work being done on nutrients — you can grade food with points — minus points for saturated fat and give it plus points for vegetable oils. That way there’s no confusion between an avocado and meat pie. Some things like milk are high in fat but have got good things going for it.”

She says making junk food less available, such as limiting the number of dairies and fast food chains in communities, could also work.

How would a fat tax affect those in hospitality? Bruce Robertson, the industry’s president, says the answer is clear. “It would put the prices up,” he says simply. “The fundamental thing is the tax would put the prices up on items and then that would be reflected on the menu. Lots of products have a component of fat, which customers want and like.

“It is simply another tax. I have had a look at the situation in Denmark, and even in Denmark the jury is out on whether it’s the right decision. It seems to be as much a revenue gathering exercise as it is a health one.”

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