Taxing unhealthy food and drink

Yesterday Denmark scrapped its fat tax and cancelled a proposed sugar tax, yet pressure is building in the United Kingdom for new health taxes.

Most tax systems are too complicated and don’t achieve the goals they declare. This is true for company profits and personal incomes as well as product sales.

Government has to raise money and we all want a healthier society.

I agree with higher taxes on alcohol and tobacco, where there are social costs. So perhaps I should agree with higher taxes on fat, salt and sugar because obesity is also a heavy burden on society.

If only it were as simple as that.

For most people in the developed world, food and drink consumption involves choices. These choices need to allow for pleasure as well as safety and affordability.

Businesses can and do seek to make these choices as positive as possible, but they can only go so far before losing customers.

Society has to help with three other issues – education, exercise and encouragement – three vital e’s.

Taxation is only one tool in the toolbox and a rather blunt one. I believe higher taxation on fat, salt and sugar is not the answer.

My reasons are these. I am not aware of any higher taxes on supposedly unhealthy food actually improving health. People are not all the same. Nutrition policy has to be more carefully targeted. Food taxes always hurt the poorest more, because food accounts for more of their spending.

One simple improvement would be to stop taxes being a disincentive to good health. For example, in Britain there is 0% tax on most food, but it is 20% for bottled water and fruit juice. Yet bottled water has no calories and a serving of fruit juice counts as one of the five a day fruit and vegetable portions recommended.

Another would be to start realising that dairy fat can be good fat. Public policy over the past 30 years has driven people away from dairy and its great nutrients into sugar without nutrients. Yet more and more science shows that drinking milk and eating cheese do not make people obese.

What do you think ? I’d be interested to hear your views.