Coming soon: The Fat Tax
Larry Elder (1999.11.09 )
It’s on. The Centers for Disease Control and Prevention just released a new study. Americans, say the CDC, face a new epidemic — fat people.
The CDC calls nearly 18 percent of Americans “obese,” meaning that nearly one in five of us weighs more than 30 percent above the ideal. From 1991 to 1998, says Dr. Jeffrey P. Koplan, director of the CDC, “We had a 50 percent increase in obesity in all age groups and in all ethnic groups. We’ve had a steady increase throughout the 20th century, but this is a remarkably quick upturn … We don’t have a simple answer why.” Gee, I dunno, maybe people are, like, eating a lot.
But if one defines “fat” as being above the ideal, but less than 30 percent overweight, this expands the fat pool considerably. Under this more generous definition of overweight, a Tufts University study found 63 percent of men and 55 percent of women fat. Shocking!
One newspaper editorial, calling the results a “public health crisis,” condescendingly said, “So, as soon as you finish this paper, lace up your shoes and go out there and walk as if your life depended on it. It does.”
Does this pattern sound familiar? First, we call something in which Americans voluntarily engage, whether smoking cigarettes or purchasing handguns, a “public health crisis.” Then, Congress holds hearings to explore “alternatives” or “solutions.” Next, we get regulation. Finally, Clinton declares Halloween trick-or-treating a national disaster, triggering the release of FEMA funds to distressed neighborhoods.
Don’t laugh. Yale University Professor Kelly D. Brownell suggests taxing unhealthful foods. According to Brownell, Americans are being seduced by “our toxic food environment,” which offers up a “diet that is high in fat, high in calories, delicious, widely available and low in cost.” He recommends policies that would subsidize healthy foods like fruits and vegetables, while taxing “unhealthy” foods such as those high in fat and cholesterol. [Editor's Note: How about just removing price and quantity controls on healthy foods (like oranges), and stop subsidizing unhealthy ones?] He proposed channeling the proceeds into nutrition education and public exercise programs.
A “Twinkie tax,” says Brownell, would encourage people to make healthier eating choices. “As a culture, we get upset about Joe Camel, yet we tolerate our children seeing 10,000 commercials a year that promote foods that are every bit as unhealthy.”
Hey, why not? After all, the government tells us that nearly 400,000 people die prematurely from cigarette smoking. To get this number, the government simply “credits” cigarettes with a death if the deceased smoked, no matter the decedent’s age, weight, or lifestyle. So if a 97-year-old guy dies in his sleep, but paramedics find a pack of Winstons on the night stand, make it 400,001.
Now the CDC tells us that almost as many die from heart disease, a condition caused or exacerbated by an unhealthful diet. In short, McDonald’s, Burger King, and Wendy’s kill. So attorneys general, start your lawsuits! Why not a class action lawsuit against C&H Pure Cane Sugar? After all, these manufacturers probably knew that sugar rots teeth and provides little nutritional value, yet they nevertheless continued distributing the product without warning labels. Evil personified!
Oh, sure, some killjoy will remind us that Americans live longer and better than ever, and that, sooner or later, people die. From something. But such cynicism cannot stop the tofu-eating, tree-hugging, anti-smoking, I-can-look-out-for-your-health-better-than-you-can zealots who now have a new freedom-eroding cause — slimming down fat people.
Somewhere, actor-director Rob Reiner trembles. He, after all, spearheaded a California proposition that placed a 50-cent tax on cigarettes. The portly Reiner, who seems quite capable of getting the best table at Fatburger’s, could face a serious tax liability. But will Reiner, a rich man, suffer? No, a fat-tax, like the one on cigarettes, would fall directly on the shoulders of those least capable of affording it — poor people. Studies show the poor more likely than the rich to eat an unhealthful diet, and therefore, they comprise a disproportionate number of the obese. But, then, this is for their own good, right?
Hillary Clinton tells us “it takes a village.” President Clinton, however, recently lectured those who dislike him, and thus refuse to support Al Gore for President. “I don’t think mature people,” said Clinton, “hold one person responsible for another person’s conduct, do you?” Well, yes. For “mature people” hold gun manufacturers responsible for the thug who kills, and hold cigarette manufacturers responsible for those who smoke despite warning labels. And now, “mature people” assault the eating habits of others. Is obesity harmless? Obviously not. But do we ask too much by allowing people to govern their own behavior?
So the “it takes a village” people carry on, with attorneys general, politicians, academics, and regulators happily marching along. As somebody once put it, “You can fool some of the people all of the time, and all of the people some of the time. And that’s sufficient.”
Saturday, July 14, 2007
Fat Tax: Why we should tax unhealthy foods
If a government could introduce a relatively painless way to prevent 3,000 lives being lost through terrorist action, do you think we would hesitate to introduce such a policy?
A report by the University of Nottingham and University of Oxford [1], claimed that introducing a tax on unhealthy foods would save, at least, 3,000 lives a year from heart disease. The authors also claim this is a conservative estimate, because it ignores the benefits from the reduced incidence of diabetes, strokes and other obesity related illnesses.
Yet, despite the real benefits promised, many politicians and consumers were quick to dismiss the idea. Is it really a good idea to introduce a fat tax, or do Big Macs deserve to remain cheap and free of extra tax?
Arguments for a Tax on Unhealthy Foods
1. Externalities of Unhealthy Foods.
Unhealthy eating has an impact on ourselves but also on the rest of society. Obesity related diseases cost the UK £3.4bn per year. [2] The cost of Obesity in the US is estimated at $75 bn.[3] If we choose to eat foods that make us unhealthy and obese, this creates external costs such as:
- Medical Costs – treating obesity.
- Lost productivity at Work e.g. Time off sick
- Premature death
Therefore, the government should collect sufficient tax from unhealthy foods to pay for the external costs that they create. It is the same principle as to why petrol and cigarettes are taxed; e.g. higher petrol tax is justified because petrol causes pollution.
The external cost of unhealthy food is not easy to calculate, but this is not a reason to avoid having a tax. The point is that at the moment society is effectively subsidising the consumption of unhealthy foods, and ultimately it is the taxpayer who has to pay for this.
2. Personal Cost of Obesity
Eating unhealthy foods increases the likelihood of obesity, early death, depression and a whole catalogue of related problems [4]. Higher prices would discourage people from consuming unhealthy foods. It may not stop people eating fatty foods completely, but this is not the aim. Reducing consumption of fatty and salty foods would have a significant benefit in improving health and personal well being.
3. It will save lives
Currently, more than 216,000 people in the UK die from heart attacks and strokes each year [5]. Heart disease is the second most common cause of death. The report suggests that 3,000 lives per year could easily be saved in the UK. As well as saving lives, reducing obesity will also improve the quality of life.
Arguments against a Fat Tax
1. It is unfair to tax fat people. It is discrimination
This is not a tax on fat people. A government inspector is not going to go around with a weighing scale, dishing out tax penalties for people who tip over the scale. This is a tax on unhealthy foods, paid by everyone who chooses to consume them.
2. It's just another scheme to raise government revenue
A tax on unhealthy foods should be revenue neutral. It is not about raising total tax revenue, it is about switching the tax burden. If the government raised £2 billion a year from such a tax, this tax could be used to subsidise healthy foods, pay for health care or reduce other types of tax.
3. It is a tax on the poor
The argument is that those on low incomes are more likely to consume unhealthy foods, therefore, this tax will increase inequality. However, if a tax on fatty foods saves lives, we should not avoid implementing it just because it is the poor who will mostly benefit. If we are really concerned about the impact on equality, the revenue from a fat tax can be targeted to the benefit of the poor. An increase in inequality need not occur from a fat tax.
4. Nanny State
- Who is the government to tell people what to eat? If people want to eat salty and fatty foods then let them.
But, the whole point is people are still free to consume as much salty and fatty foods as they like. It is just that now they have to pay a fairer reflection of the true cost to society. If you got drunk and caused economic damage, has not the state a right to make you pay for the economic costs of your drunkenness? Similarly society has a right to make you pay for the economic cost of unhealthy food. As an additional benefit, you will probably live longer and feel happier.
5. It won't have any effect
- Look at smoking; the government tax smoking, but people still smoke. Tax on petrol has not stopped people driving.
Demand maybe inelastic for fatty foods, but they will reduce consumption by a certain amount, and this is the intended effect. For example, a tax on an extra large Big Mac, may reduce consumption by 20%. Instead of eating 10 a week, some people may not only consume 8 a week. This reduction of 20% will have a big impact on improving health. The aim is not to stop people eating unhealthy foods, but reduce excessive consumption. In moderation fatty and salty foods do not cause a problem.
6. Obese people die early and save the government paying pensions
In a perverse way, this is actually a good argument. Because people who eat unhealthy foods have a shorter life expectancy the government will pay out less state pensions. Therefore, this reduces the external cost of obesity and so lessens the justification for a tax based on externalities. However, in another way, the fact that people die early is hardly a powerful argument for not trying to stop it.
