Food and Beverage Tax and Obesity Report

Running Head: FOOD AND BEVERAGE TAX AND OBESITY REPORT
Food and Beverage Tax and Obesity
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FOOD AND BEVERAGE TAX AND OBESITY REPORT 2
Food and Beverage Tax and Obesity
Introduction
In 2003 the World Health Organization and Food and Agricultural report suggested that
the pricing and cost of healthy foods were vital considerations in the management and prevention
of obesity. It is significant to note that the inexpensiveness of foods considered unhealthy
compared to fresh produce is believed to be a vital contributor to excess as well as
overconsumption of food especially junk foods. Moreover, by raising the prices of energy-dense
and cheap foods, this report which will be presented to the policy makers in the public and
private sectors hopes that a junk food tax will influence the peoples especially the consumers to
reject their unhealthy choices of food in favor of the foods that have high energy (1). In the
theoretical framework, a junk food tax might promote a healthy lifestyle among the people by
diminishing the overconsumption of unhealth beverages and foods particularly fast foods and
snacks as well as motivate the industries and manufacturers to produce foods which are healthy
for the public and consumers. The report will present the recommendations that can be made in
the food industry especially food and beverage tax to reduce preventable lifestyle diseases like
obesity. Moreover, the report will focus on prevalence of obesity and food and beverage tax.
Background Information
Taxing unhealthy beverages and foods is expected and I believe will minimize their
consumption via food and beverages’ across- and own price elasticity. I believe that the price
elasticity mirrors the extent of product demand pricing and can be described as the change of
percentage in the outcome, that is, weight or consumption of food leading to from a one
percentage change in the price (2). Therefore, price elasticity is vital to determine the accurate

FOOD AND BEVERAGE TAX AND OBESITY REPORT 3
forecasting of impacts of taxes. With beverages and food, policy makers have to take into
consideration its demand elasticity in relation to the goods own price or the own-price elasticity
as well as the demand elasticity for the good, regardless of a change in another goods price or
cross-price elasticity. It is vital to note that the demand for a given food or beverage product is a
function of the price of the product as well as the price of other products, income, and other
elements which determine the individual preference such as advertising.
The food that the report is proposing to the policy makers have been effectively globally.
For instance, in 2011, Denmark proposed and introduced the globe first tax of fat with a goal of
minimizing cardiovascular disease. Therefore, any food product having more than 2.4%
saturated fat attracted an addition of 17 krone per kilogram. Nevertheless, the government of
Denmark repealed and amended the tax in 2012 after just one year of its execution (2). The
people of Denmark had discovered means of circumventing the tax law by buying taxed food
products across the border in Sweden or Germany. Even though tax on fat in the country was
short lived for any meaningful evaluation of consumption of food items containing too much
saturated fat, its amendment and repeal pinpoints the problems which can arise from food and
beverage tax especially the unhealthy foods and beverages. Therefore, the report requests the
policy makers and implementors of these recommendations to forecast the challenges that these
food tax will face in the future and propose sustainable and viable solutions. In Hungary, in
2011, the country imposed a 11-forint tax on any packaged food item that had high saturated fat,
sugar or salt to aid cover the healthcare costs. France in 2011 approved soda tax of one-euro cent
on every canned soft drink as part of a bill to minimize deficits in public health care as well as
reduce the negative impacts of overweight or obesity. However, until very recently these taxes

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from various countries have never been effectively and appropriately executed to offer
longitudinal data on their impact on overweight or obesity (3).
Numerous United states of America states levy or impose taxes on particular foods as a
source of revenue, even though none having the goal and intent of fighting excessive
consumption of unhealthy foods and beverages or impacting on nutritional content. This scenario
is also being effected in Canada and Europe under the value added tax concept that targets food
yet cannot be viewed as food tax in itself. In numerous states in the US and Canada such taxes
are levied on soft drinks, snack foods, and sweets but not basic common groceries. This type of
practices differentiates needs from wants as well as has ben executed United Kingdom, Italy,
Ireland, Germany, and Belgium. The real impacts of the sale taxes on consumption has remained
unclear, however, noble the intention has been. Accordingly, some researchers have argued that
taxes on sales are comparable to excise taxes, inefficient in controlling demand. Relative to sales
taxes that entail a percentage of the prices of retail, excise taxes are imposed at a fixed price per
unit value (4). Even though the public have the potential to save on sales taxes every time they
purchase products in bulk, excise taxes are anchored on the retail price, thus, motivating the
people to purchase less of the item.
A common quintessential is excise taxes in the United States of America applied on
cigarettes which has averaged US$1.47 per pack as of 2012. From 2003 the US states which
were without or did not impose sales taxes on snack foods or drinks were five times more likely
as states having or imposing the sale taxes to have a comparable rise in the prevalence of
overweight or obesity. Moreover, the same outcomes were observed in states which had
amended an existing snack food or soft drink tax, making them fourteen times as more likely just
as other states to have a rise cases of obesity. It should be noted that positive and beneficial