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Debate: Fat tax

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Should there be a tax on fatty foods?

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Contents

Background and Context of Debate:

The world is facing swelling numbers of people who are overweight. In the past decade the number of overweight people rose from 200 million in 1995 to 300 million in 2003. Even in parts of the world like Africa, clinics for overweight people are being established. In India, 55% of women between 20 and 69 are overweight. The same goes also for 20% of adult Chinese. The ratio of overweight children in Brazil rose by 239% in the last generation. All in all, 1.7 billion of the world’s population is supposed to be overweight according to the World Health Organisation. Moreover, this also significantly affects countries’ healthcare systems. Statistics for the USA show that obesity causes 300,000 deaths each year and costs the economy $117 billion per year in additional health-care expenses. New York Assemblyman Felix Ortiz, a Brooklyn Democrat has floated the idea of a fat tax. He believes that a tax would create a small disincentive towards the consumption of high-fat, low-nutrition foods and therefore reduce the obesity figures. Similar suggestions have also appeared in the UK, Australia and Canada.


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Governmental social guidance: Are governments justified in attempting to incentivize and shape desired social ends? Can the government avoid sending the wrong social message about beauty and slimness?

Yes

Argument that government policies are consistently advanced for the purpose of shaping individual behavior for desirable social ends: Anthony Westell, "Why the obesity epidemic justifies a fat tax", GlobeandMail.com, 4/11/07 - "we use tax policy to influence all sorts of private decisions to produce what we consider to be socially desirable results. The progressive income tax itself is intended to bear more heavily on the rich than the poor. There are, for a few examples, tax incentives for buying a first home, for retirement saving, for the higher education of one's children, for investing in Canadian companies. Taxes on corporations are manipulated to obtain all sorts of economic ends thought to be good for the country." So, why not with food and health policy as well?

Being slim is desired in society. Your physical appearance generates options and sets ones value on the sexual market. People who take care of themselves are more efficient, healthier, and happier. Because there is little dispute about the merits of health to both the individual and to the broader society, governments may be justified in creating incentives for producing such desired ends for all individuals.


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No

Argument that the view that slimness is a symbol of beauty and leads to economic success is chauvinistic: In many parts of the world, being fat means prosperity and fertility. The round belly implies physical stability and economic sufficiency.

Argument that a "fat tax" could enforce dangerous impressions that society demands slimness and lead to increased cases of extreme dieting, anorexia, and/or bulimia: Anorexia is a serious problem in many societies, particularly among young women. It is often driven by an impression that a society demands or desires slimness among its members. Some argue that a government policy that taxes fatty foods for the sake of upholding such an image or ideal (even if for a multitude of reasons), could re-enforce the impression among certain members of society that they must be slim, and go toward justifying extreme dieting, anorexia, and/or bulimia toward this end.[1]


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Obesity epidemic? Is there an obesity epidemic worldwide, and is a "fat tax" a means to responding to this epidemic

Yes

Argument that obesity and fat consumption is an "epidemic" that warrants a sever governmental response, such as a fat tax: Fat causes severe medical problems. Diseases connected with being overweight such as high blood pressure, cancer, heart diseases, diabetes etc. are the cause of over 50% of deaths in the Arab world. If a fat tax is introduced, fat consumption will fall as consumers save money by buying non-fatty foods. Lower fat and fat-free foods will abound and the society will benefit. Citizens will be leaner, healthier, happier and more productive.[2]

Argument that a "fat tax" would save lives: A paper written by Tom Marshall - a professor at the University of Birmingham - and appearing in the British Medical Journal in 2000 [3], said that taxing fatty foods would prevent hundreds of premature deaths each year, and cut the incidence of heart disease by about 10 per cent.

Contention that if tobacco and alcohol are governmentally discouraged and heavily taxed for the reason that they are bad for human health, why not do the same for fatty foods? Anthony Westell, "Why the obesity epidemic justifies a fat tax", GlobeandMail.com, 4/11/07 - "We ban the sale of cigarettes to children and tax heavily to discourage smoking by adults. Tobacco companies are forbidden to advertise. Why? Because we know smoking may cause cancer and other ailments. We have similar policies discouraging the use of alcohol. The new health problem rapidly becoming an epidemic is obesity, particularly among children. We know colas and other sugary drinks are significant contributors to obesity. They are not as dangerous to health as smoking and drinking, so we probably couldn't justify banning their sale to children, but there is certainly a case for taxing them to raise prices and reduce consumption."




No

A tax on consumption will not solve the problem of low exercise levels, and the contribution that this makes to obesity: Regardless of the decisions that politicians make on taxation, taxes alone cannot begin to address the larger problems - health-related, social and economic. Health is at least as much about exercise as it is about diet and there is a wider problem with life style that is being recognized by the broader population. Most primary students now get less than one hour of PE weekly, and in many high schools the course is optional.[4]

Obesity may be the cause of overeating as much as it is a cause of eating fatty foods, reducing the impact of a "fat tax": There are some disorders or biological propensities that cause individuals to eat too much or that cause them to be obese irrespective of the types of food that they consume. Individuals living with such inherent difficulties would not necessarily benefit from a "fat tax".




Effect on companies: Is a "fat tax" fair to companies that produce fatty foods?

Yes

Counter-argument that merited companies should be willing to adjust to a "fat tax" and adopt healthier product standards: "There is, of course, the downside that due to increased financial pressures, certain companies could become very strapped for cash, possibly going out of business or forced to fire workers. This is a not a sufficient argument. Any company that is worth worrying about will work to change policies and ingredients until its products meet health standards, thereby avoiding the tax."[5]




No

Argument that such companies would suffer from lower consumption of their product: Companies that sell fatty products would suffer from lower consumption of their goods, assuming that such a tax would have the desired effect of lowering the consumption of such goods. Yet, these companies would complain that they have done nothing wrong, and do not deserve such governmental penalization of their product-line. They would argue that, in a market economy, their company should not be punished for merely supplying what the market demands.




If the price of fatty foods increases due to a tax, won't that make the price of healthy food increase?

Yes

If a tax is imposed of fatty foods, the price of these foods will go up. Law of demand does state the demand for these fatty foods will go down, but what will happen to the price of the healthier foods? IMHO, companies that produce the healthier foods will use this as a reason to increase their prices. With the huge debate over obesity and healthier lifestyles, demand for healthier foods will also increase; meaning the supply for these items will decrease. Basic economics still says that the price equilibrium will increase. So, imposing a fat tax will only make it more expensive to eat: healthy or not.




No

The prediction that the price of healthy foods would increase depends on the assumption that the only thing companies ever consider to achieve their goal of higher profits is raising prices. This is false because the trade off incurred by the company when prices are raised is competitiveness.

Consider this thought experiment.

Two companies A and B, who have the same standards of tastiness, healthiness of product and advertising coverage are competing for the same market. A chooses to raise prices since he expects the fat tax to increase demand, B sticks with the same low price and undercuts A.

Who will have the higher turnover? The fact that many food items have a limited shelf life further tips the situation to B's favour.

Since absolute supply is not always an accurate indicator of price, (Just look at Debeers and OPEC), this then becomes a question of whether healthy food supplies are adequate enough to meet demand.



Tax-revenue generation: Could the tax revenue generated from a "fat tax" be used for positive purposes, and could a "fat tax" be justified, in part, for these reasons?

Yes

Advantages of tax-revenue generation for the state: A fat tax could be very lucrative for a state. An article published in the American Journal of Public Health in 2003 found that 17 U.S. states already have special taxes on soft drinks, candy and snack foods and estimated that these fat taxes already generate more than $1-billion (U.S.) annually. The Centre for Science in the Public Interest estimated that, countrywide, they could raise an additional $1.5-billion. Similar taxes in Canada would raise up to $250-million. The money can be spent on public awareness programs and campaigns, research, etc.

Argument that revenue from a ‘fat tax’ could be used in various ways related to the encouragement of health in society: Such suggested forms of usage have included:

  1. Subsidizing for healthy foods.[6]
  2. Subsidizing exercise equipment.[7]
  3. Funding advertising campaigns for healthy eating or in schools.[8]

Claim that a fat tax will help correct a market failure and reduce the social costs that result from the consumption of fatty-foods: Tom Marshal, Department of Public Health and Epidemiology, "Exploring a fiscal food policy: the case of diet and ischaemic heart disease", 2000 - "Diet determines cholesterol concentrations, and cholesterol concentrations determine the prevalence of ischaemic heart disease. This paper explores the potential effects of fiscal measures on diet and ischaemic heart disease. There is a clear economic rationale for this approach: the correction of market failure caused by externalities. Externalities are said to occur when some of the costs of consumption are not borne by the consumer. When ischaemic heart disease strikes, there are costs to the community (productivity losses or indirect costs) and to the health service (direct costs). A case can therefore be made for using taxation to compensate for the external costs of an atherogenic diet."





No

Governments have no incentive to impose additional taxes on fatty food. Different food industry lobbies oppose such tax and exercise pressures on governments. Many food-related multinational companies are big supporters of presidential campaigns in the USA and also have very important lobbies in various other countries. Money gained from such a tax would also probably be channelled into armament programs and other big-budget services instead of directly to consumers.





References:

Motions:

  • This House would act against obesity
  • This House believes that the world is too heavy
  • This House would impose fat taxes

In legislation, policy, and the real world:

See also on Debatepedia:

External links and resources:

Books:


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