The Fat Tax Debate: Good Idea or Destined to Fail?

The first country in the world believed to introduce a “fat tax” was Denmark when in 2011 it put a surcharge on foods that contained more than 2.3% saturated fat.

But only a year after the tax was implemented, lawmakers decided to revoke it. The reason? Not only was it one of the most heavily criticized taxes they had ever had, but according to The Washington Post, the government’s hope of reducing unhealthy consumption didn’t quite pan out. Instead of cutting out these food items, consumers “simply began to do their grocery shopping internationally, heading to countries that didn’t levy a fine on fat.”

Not only did the citizens continue to eat unhealthy foods, but now their money was supporting other economies. In addition, the administrative system was complex and the cost of implementing it was just too high for producers and outlets.Fat_Tax

Now the latest country to eye a fat tax is Australia. Jane Martin, the senior adviser with pressure group Obesity Policy Coalition in Australia, has been trying to convince lawmakers to raise the price of junk food in hopes of curbing the country’s rising obesity rates.

News.com reports “Six in 10 Australian adults, and one in four children, are overweight or obese” and Martin believes raising the prices will encourage people make healthier choices.

“We think unhealthy foods should be taxed and the funds raised used to subsidize healthy food for people on a low income,” she said.

Those on the other side of the argument however, believe the same issues that caused Denmark to cancel its fat tax applies to other countries as well.

The Economics Student Society of Australia (ESSA) recently assessed a fat tax would be problematic for various reasons: First of all, it’s difficult to define what unhealthy is and “narrowing down [several] factors to the level of specificity necessary for tax legislation would be very complicated.” It’s also no easy task to appropriately tax these food items to correct market pressures and could instead “lead to inefficient over-taxation leaving society worse off after the tax than before it.” The ESSA also predicts the administrative costs would be unjustly high — one of the main reasons the Danish Tax Ministry removed its fat tax.

The debate on implementing a fat tax in Australia is still on. What’s your take on it? Do you think it is a viable solution to correct the country’s obesity problem, or do you think it is destined fail? Share your thoughts.

Feature Image: The Inquistr
In-post Image: 123rf.com

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