Globesity and Tax in the Far North

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Childhood Obesity News has been looking back over debates about tax, in recent years, and some of the attempts to implement taxes on soda and junk food to offset the enormous costs of public health care. Around the world, various countries have tried to cope with the problem, experiencing varying degrees of success.

Freakonomics authors Stephen J. Dubner and Steven D. Levitt attended a seminar, sponsored by the Robert Wood Johnson Foundation, on what to do about childhood obesity, and naturally the subject of a “fat tax” (an umbrella term for taxing various unhealthful goodies) was on the table. Dubner remarked:

One objection that I was surprised no one raised: the simple fact that taxpayers might hate the tax and rebel against it to the point where it becomes politically and economically impossible.

As luck would have it, it was during this conference that Denmark announced it was abandoning a brave and innovative fat tax (affecting oil, butter, sausage, cheese and cream) after only a year of implementation. A government assessment found that there had been a negative effect on the economy, and that the tax had been especially damaging to small businesses. In the wake of this decision, the Danish government also gave up on a planned sugar tax.

In 2014, when Canada was considering a fat tax, people remembered how Jens Klarskov of the Danish Chamber of Commerce had compared the food tax notion to using nuclear weapons for rabbit-hunting—in other words, an unnecessary show of overkill. Journalist Jordan Bateman gave more details on Denmark’s short-lived experiment:

It was an economic disaster: half of all Danes poured south to shop in cheaper Germany, more than 1,300 Danish jobs were lost, and merchants became snared in red tape.

The discredited Danish effort set an unsavory precedent that food-tax opponents eagerly cited time after time. This echo came from Gary Dawson CEO of Australia’s Food and Grocery Council (read: industry lobbyists) who said of Denmark’s aborted fat tax:

It raised food prices, hit the poorest the hardest and failed to bring about any measurable public health benefit—a shocking policy trifecta that no sensible government would want to emulate.

Of the Nordic countries, Finland is the fattest, but when a poll was commissioned earlier this year to take the public temperature regarding a fat tax, the research company found little enthusiasm. Its news service reported:

In the questionnaire about one thousand people were asked, among other things, if more tax money should be allocated for dealing with the problem. As many as 57 percent of respondents weren’t keen on this option. So should there be a fat tax—that is, a surcharge for overweight people using healthcare services? As many as 73 percent of respondents opposed such additional charges.

The researcher also made the sensible point that in Finland, a great deal of the native obesity is attributable to alcohol consumption. Even if it were successfully passed, a fat tax on food would cause social uproar disproportionate to the amount of good effect it might possible have.

Your responses and feedback are welcome!

Source: “Fans of a “Fat Tax” Will Be Saddened by the News From Denmark,” freakonomics.com, 11/13/12
Source: “Opinion: Food taxes didn’t work in Denmark and won’t work here,” VancouverSun.com, 05/22/14
Source: “Federal Government backed study into fat tax on fast foods,” AustralianRetail.com, 05/21/13
Source: “Survey: Finns are against fat tax,” Yle.fi, 05/05/15
Image by Tom Woodward

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