Food and Beverage Tax and Obesity: Recommendations for Government

This report investigates the potential of food and beverage taxes to combat obesity, addressing the request from the National or State Government Department of Public Health. It explores the existing literature on food taxes, including examples from Denmark, Hungary, and France, and exa...Read More

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

FOOD AND BEVERAGE TAX AND OBESITY REPORT 4
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

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health outcomes coming from taxes not geared towards health outcomes can be a progressive
sign for implementation of taxes within a public health agenda which the policy makers and
recipients are all geared towards (5).
The levying of sales taxes in the United States of America and value-added taxes in
Canada and Europe on food and beverages has demonstrated with clarity that even small and
minute taxes have the potential to generate huge revenue and also have positive impact on public
health outcomes especially on obesity. Empirical researchers have estimated that excise tax of
one percent on every 13-ounce soft drink on a national level can amount to US$1.6 billion
annually. These generated revenues can be used to improve the healthcare system of a given
country.
Justification of the report
Some of the arguments against food and beverage tax is its impingement and
infringement on persona; freedom. Nevertheless, the cost of managing and treating obesity
coming from poor nutritional choices of individuals are borne by the whole community as a
whole via taxes, overburdened healthcare system or even lost productivity. For instance, in 2009,
the cost of health linked to obesity and overweight in the United States of America totaled $148
billion (6). The cost of obesity also impacts the workplace, in which reduced productivity as well
as enhanced absenteeism impact the large-scale functionality of a community. The food and
beverage tax is like a stewardship made to aid bring about transformations which people on their
own cannot. It is key to note that stewardship is not given much appreciation when it tries to
protect people from harming themselves and other people (7).

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However, the question which the report is asking is whether individuals are having
enough knowledge to make prudent and informed choices concerning consumption of food and
beverages. Consequently, economists and medical experts state taxes imposed by the
government are generally effective to correct various market failures. In relation to food and
beverages, this translates to features which determine people tp make choices which are
suboptimal on nutrition, like information failures as well as the failure to consider external
expenses when people choose what they eat. Furthermore, legislations and regulations can entail
a middle ground between a nation that bans all risky activities as well as one which leaves
individuals’ health to themselves (8). Palatable and sweetened foods and beverages activate the
circuitry reward of the brain in the same way as numerous addictive substances and the increased
cases of obesity can be linked to the enhanced availability of as well as exposure to hugely
comfort foods. Studies on brain imaging reveal that a decrease in dopamine D2 receptors in
people who are overweight or obese are the same in intensity to the people who are addicted to
drugs and can play a role of modulation in conferring a given susceptibility to intensive
consumption behavior.
The results support the notion that individuals normally have the urge to lose weight as
well as become healthy but find it hard to do so. In relation to potential and likely addiction (9),
it will be reasonable for the policy-makers who are the recipients of this report to consider as a
regulation model which have been executed for the same addictive activities as well as products
without expecting a single intervention to reduce the prevalence of obesity and overweight (10).
The Proposed Food Tax
It should be noted that tax propositions usually are grouped into two categories, that is,
taxes on particular nutrients as well as taxes on predefined beverages and food. The two

FOOD AND BEVERAGE TAX AND OBESITY REPORT 7
categories face vital practical problems leading to an attempt to categorize foods which are
normally intricate combinations on different nutrients in varying degree. However, in this report
I will present taxes on food and beverages.
Snack Food Tax
It should be noted that taxing different categories of food has been a widely suggested
method bypassing numerous problems which are inherent in nutrient taxes. The pragmatism of
this concept is anchored in the comprehension that certain foods do not fall into the group of
basic needs. Many empirical researchers have argued that tax on snack food is legislatively
viable. More most of the cases of rise in intake of calorie usually come from snack consumption
since 1980s (11). It should be noted that snack foods are usually rich in energy leading to
numerous proponents of tax to champion for the inclusion of snack foods in legislative and
policy recommendations. Nevertheless, present epidemiological evidence has highlighted that
tax on snacks alone can be ineffective in mitigating the prevalence of obesity. A 21 percent tax
on chips can theoretically lead to an insignificant 840-calorie decrease per capita. Moreover,
snacks also bring classification gray areas. In 2008, there was a review which was conducted and
it identified food products normally characterized at states as snack foods, entailing chewing
gum, pretzels, chips, candy, baked goods, milkshakes, and popsicles. However, many questions
usually arise, that is, a breakfast bar which is tax free is basically healthier relative to a taxed
candy bar (12).
Taxing Beverages
Sugar-sweetened beverages (SSBs) are considered as the single most vital contributor of
prevalence of obesity. For the past ten years, per capita calorie intake gotten from SSBs and

FOOD AND BEVERAGE TAX AND OBESITY REPORT 8
carbonated drinks has enhanced by about 31%. Furthermore, beverages are believed to account
for 11%-16% of intake of calorie for adolescents as well as children (13). Present empirical
research has discovered that people who are genetically predisposed to adiposity are usually
vulnerable to serious health impacts of consumption of SSBs. A tax on SSBs can also result in
measurable outcomes, for instance, a research study found out that reduction a quarter of calories
derived from SSBs can result in an approximated decrease of 8000 calories per capita translating
to over two pounds yearly for average person. The decrease can significantly minimize the risk
and prevalence of obesity, cardiovascular diseases, diabetes and related conditions (14). Other
approximated effects of a tax on SSBs on obesity are relatively modest, entailing a study’s
projected reduction of 0.07 body mass index (BMI) points leading to a maximum 21% tax on
soft drink. The approximations have to be considered in particular limitations, like BMI validity
as a surrogate obesity measure. Moreover, the degree of impact is likely to differ among different
demographic population.
A tax on SSB can also constitute one of the biggest revenue source to be gotten from a
snack tax. Therefore, even though only heavy taxes can substantially reduce or decrease
consumption of SSBs, small tax can still get a significant revenue that can be earmarked to
incentivize or subsidize foods and beverages considered as healthy. Approximated state that a
56% tax rate can reduce the proportion of obesity and overweight by 0.8% (15). Thus, such as
reduction in weight is projected to have a greater effect over tome yet will not reverse or reduce
trends in obesity per se. Therefore, the report also takes in cognizance of the fact that weight and
obesity results will be dependent on which food or beverage product substitution, people choose
to make.

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Action Plan and Recommendations/Strategies for Food and Beverage Tax
Action Plan
These policy and legislative framework on food and beverage tax will be taken to the
legislative assembly for debate after which it will be implemented. I expect all the members of
legislative assembly to pass the bill and become law. The government should then create agency
that follows up the law which should be implemented to the latter.
Recommendations
Almost 78% of deaths in the country is attributed to non-communicable diseases like
obesity. The report proposes legislative and regulatory measures which must be undertaken to
reduce the impacts of obesity (16). The report suggests that the government or the policy makers
create a food act to overlook and regulate on junky and unhealthy foods and beverages by
levying taxes on them. Once the Food and Beverages Act has been formulated, there should be
various security enforcers who are tasked with inspecting foods to make sure that food quality
and safety are addressed and manufacturers pay taxes on food and beverages (17). The
government should and promote entities that are creating awareness on the negative effects of
junk foods and the significance of levying taxes on unhealthy foods and beverages. it should be
noted that most consumers and businesses are unaware of the dangers of junk foods and even on
legislations on food and beverage taxes. The government should ensure that consumers and
businesses are aware of these legislations and policies so that they are not rejected (18).
Conclusion
The consumption of Junk and unhealthy food and beverages deterrent in the form of an
ideal tax will result in significant revenues as well as positive health impacts to the government

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and the people (19, 20). It is prudent that the report be given considerations by the policy makers
so that all the benefits indicated in the report can be realized.

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