Is a ‘fat tax’ the answer to Australia’s obesity crisis?

Australia needs a tax on unhealthy foods that covers more than just fat content. Flickr/ms Tea

Australia should follow the lead of Denmark and consider taxing foods high in saturated fats to curb the nation’s growing obesity problem, Greens leader Bob Brown said at yesterday’s tax forum.

This week Denmark added an additional tax on foods containing more than 2.3% saturated fats, which includes butter, meat, milk, cheese, oil and processed foods.

So does Australia need a tax on fat? And how would it work? Dr Gary Sacks, Research Fellow at Deakin University’s Faculty of Health, has modelled options for taxes on unhealthy foods and shares his thoughts:

Obesity is a growing problem in Australia, with two out of three adults classified as overweight or obese. This increases their risk of developing chronic health conditions such as diabetes, cardiovascular disease and diabetes.

The key drivers of obesity are around the food supply, particularly the increasing supply of cheap, tasty, high-calorie foods.

It’s clear that the obesity crisis needs to be urgently addressed – and increasing the price of unhealthy foods is one way to discourage consumers from favouring poor nutritional choices.

Denmark is taxing foods such as butter, cheese, milk, meat and oil – should Australia take a similar approach?

If we want a tax that’s going to be effective in reducing obesity in the longer term, we need a broader approach to taxing unhealthy foods rather than just measuring the fat content.

We need to consider the salt, sugar and fat content, along with an assessment of the benefits of nutrients such as fibre, and fruit and vegetable content.

Put all of this information together and you’ll get an assessment of the overall healthiness of the food. A tax should be applied on this basis, not just the saturated fat content.

A tax on unhealthy foods needs to go beyond just saturated fats. Flickr/Mailloux

Based on this assessment, what type of products would be subject to a junk food tax?

This would include some high-sugar breakfast cereals, as well as fatty meats, some biscuits and sauces, confectionery and, of course, soft drinks.

Where would the revenue from such a tax go?

Our modelling work shows a two-pronged approach would be most effective in changing consumers' food choices.

So you tax the foods that are high in sugar, fat and salt, and you use the revenue that’s generated to subsidise fruit and vegetables and some other healthy foods.

This would create more of an incentive for people to not only stop eating the unhealthy food but also choose the healthier foods.

We’d prefer the revenue generated from a tax on unhealthy foods to be used to subsidise fruit and vegetables but at the very least, it should be used for other public health measures.

Aside from Denmark, has a fat tax been imposed anywhere else in the world?

Hungary has very recently introduced a tax on unhealthy foods and in the United States some states have extra sales taxes on soft drinks.

Some US states already have a small tax on soft drinks . David Berkowitz

But these US soft drinks taxes are more a revenue-raising exercise than a health initiative. I haven’t seen any data on health outcomes from these taxes.

What evidence is there to suggest a tax on junk food will work?

Research shows price is one of the most important factors that consumers take into account when deciding what to buy – taste is the other main consideration. So increasing the price would discourage consumption.

We also know that when the price of foods change, people respond – a clear example is when the price of bananas goes up, consumption of bananas goes down.

There is also a lot of evidence from other public health measures, such as tobacco and alcohol, which shows when you increase the price of goods through a tax, consumption clearly decreases.

What impact will a junk food tax have on rates of obesity?

One single measure alone is unlikely to solve the problem. To make a difference to obesity levels, you need a whole suite of interventions – changing the price of unhealthy foods through a tax is just one measure.

Junk food taxes are just one of many measures needed to halt rising levels of obesity. Ed Yourdon

We also need to consider other interventions such as restricting the marketing of unhealthy foods, improving food labelling (with a simple traffic light labelling system), and implementing public education campaigns, among other things.

Won’t consumers always buy junk food, even if it’s more costly and clearly unhealthy?

The focus of all of these measures is to make it easier for people to make healthy choices.

These interventions aren’t about saying to people, “you can’t eat this and you have to eat that”. They’re about creating incentives and making the environment just that little bit easier for people to make the healthier choices.

Our modelling clearly shows that putting a tax on unhealthy foods and subsidising fruit and vegetables would end up making the population a lot healthier in the long term.

Importantly, it would have higher benefits for people in lower socioeconomic groups who are disproportionately affected by obesity and many other health issues.