Are taxes on fatty foods having their desired effects on health?
Cite this as: BMJ 2012;345:e6885
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Professor Winkler and Caillavet & Darmon, raise important issues related to the demise of the Danish fat tax. Professor Winkler calls for more information on the political process surrounding the success or failure of nutrition policies and Caillavet & Darmon suggest regulation for low cost reformulated products as an alternative. Also Professor Winkler correctly states that Smed and Robertson did not mention the debate raging in 2012 concerning the repeal of the tax by Danish government as of January 2013. Until more in-depth investigations are published this commentary provides an anecdotal review of the process that appeared to be behind the decision to repeal of the tax and asks whether any lessons can be learned regarding future tax related nutrition policies.
Although “luxury” food items such as chocolate, ice-cream etc., have been taxed for many years, it represented a remarkably shift when the previous Danish government in 2011 ruled that saturated fats were to be taxed. It appears to be the first time any European Government decided to tax saturated fat as a compound. In addition to this decision the present Government that took office in late 2011 decided to implement another “compound” tax, namely on food containing sugar as from January 2013.
As yet no systematic investigations have been published regarding the political process that unfolded before and after the repeal of the fat tax. During 2012 the existing fat tax and the planned sugar tax was more or less treated as one topic in the huge media debate that followed which makes a detailed analysis a complex task. However it seems that the role of consensus building between the affected stakeholders was important for the final outcome along with high profile media coverage.
The media played a key role in promoting political debate especially with regard to the claimed increase in trading across Denmark´s borders. Allegedly increased border trade, due to lower taxation and VAT in Germany appears to have played an important role in the politician’s decision. More than 27.800 hits for “border trade and food taxation” were reported using Google and shows how storytelling and media plays a significant role in the policy making process. In a statement from the political settlement among Government partners on November 10, 2012 the Ministry of Taxes said that the tax was repealed because it had been criticized for increasing food prices, for doing so in already difficult times, for increasing the administrative burden of Danish businesses making them less competitive and for leading to risk of job losses and higher unemployment rates. It was also stated that it was feared that the lower income groups would be hardest hit and it was concluded that there would be little political will to risk to contribute to increased social inequalities.
Food taxation is a highly sensitive issue because a range of stakeholders have strong vested interests. On the other hand taxation is high on the agenda as a potential preventive measure. It would therefore be useful if lessons can be learned from the Danish experience. The following observations provide some insight into the dynamics of the political process
1. Increased border trade: Claims reported by industry that fat taxes would lead to a loss of jobs in the food processing, manufacturing and retail sector was a recurring theme in 2012. It was argued that although the DK/GE border trade (which accounts for approx. half of border trade) was mostly limited to “luxury” items (alcohol, tobacco, confectionary and soda) averaging 10 billion DKK annually (1,3 billion Euros) it was now spreading to foods in particular foods containing fat. In addition it was argued that the trade seemed to be increasing although these allegations was rejected by the Ministry of Taxes
2. Administrative burden for food industry: The administrative burden was repeatedly highlighted in the media. Possibly the ongoing financial crisis and the reluctance of government to restrict the competiveness of industry might have played a role. A report from the Danish Food Industry (2012) stated that “as a result of our lobbying, there now seems to be a widespread political recognition that the tax is a mistake. The report further stated that the tax on saturated fat has been raising several problems. According to the report problems included
No connection between the content of fat in product and tax paid.
Administrative burdens caused by the supplier’s declarations and registrations.
Meat processing industry subject to tax on the fat content of meat not included in the finished product.
Tax on meat is a flat rate, and does not reflect the actual fat content.
Double taxation on chocolate/confectionary, as the final product is subject to the sugar confectionary/chocolate tax as well as the added saturated fat tax
3. Alliances and partnerships. The debate during 2012 showed that a wide range of stakeholders began to get involved in the policy process. Since the heavy administrative burden reported by the food industry seemed to coincide with the concerns raised by trade unions of the taxes leading to loss of jobs an alliance arguing for the removal of the tax began to develop. The alliance resulted in the planning of a joint meeting arranged by a broad range of stakeholders on November 9 on the negative consequences of border trade with special emphasis on food shopping patterns.
4. Absence of advocacy. It seems that health promoters were poorly prepared to communicate the emerging evidence about the effects of taxation. This included new evidence from a study by Jensen & Smed (2012) suggesting a decrease in consumption by 10 – 20% as a result of the fat tax. According to Mazzocchi (2012) Denmark appeared to have the most tax supportive population (76%). Similarly it was showed by Læssø et al (2012) that 75% of Danes were in favor of a differentiated VAT with healthy products becoming cheaper and unhealthy ones more expensive.
In conclusion: future regulations and fiscal measures should build on existing nutritional evidence both within and outside the food industry and consider healthy dietary reformulation of lower cost foods and reduction of administrative burden. In addition any future measures must be evaluated by health promoters using the most appropriate investigative methods to produce reliable results and to encourage broad supportive public alliances.
Caillavet, F & Darmon, N, Are taxes on fatty foods having their desired effects on health? 5 nov 2012, BMJ
Danish Academy of Technical Sciences, ATV. Economic nutrition policy tools - useful in the challenge to combat obesity and poor nutrition? December 2007. ISBN-13 978-87-7836-045-8
Danish Government Prevention Commission (Forebyggelseskommission, 2009). Vi kan leve længere og sundere. Forebyggelseskommissionens anbefalinger til en styrket forebyggende indsats. (in Danish), April 2009
Factsheet – tax on saturated fat in Denmark. Danish Food & Drink Federation August 2012. Availabel at http://foedevarer.di.dk/SiteCollectionDocuments/Factsheet_tax_on_saturat...
Food culture, assessed march 31, 2013. http://www.foodculture.dk/Kalender/2012/November/Konference_om_graenseha...
Jensen, JD & Smed, S (2012): The Danish tax on saturated fat: Short run effects on consumption and consumer prices of fats, FOI Working Paper 2012 / 14, Institute of Food and Resource Economics, University of Copenhagen. Available at http://okonomi.foi.dk/workingpapers/WPpdf/WP2012/WP_2012_14_Danish_fat_t...
Læssø, A; Fisker, L; Jensen, S; Kendal, C & Frydkjær, T . (2012) Prevention – according to the danes (in Danish Forebyggelse – ifølge danskerne. Published by Mandag MorgenValkendorfsgade 13, DK-1009 København K. Available at www.mm.dkTrygFonden
Mazzocchi, M University of Bologna, Department of Statistics. Healthy eating policies: What do EU citizens think? Eatwell/EUPHA conference Malta, November 8, 2012
Ministry of Taxes. Lavere afgifter for forbrugere, “Lower taxes for consumers” (in Danish), text from political settlement among Government partners on November 10. 2012 . Available at http://www.skm.dk/public/dokumenter/presse/FL13/1.pdf)
Smed, S & Robertson; A. Are taxes on fatty foods having their desired effects on health? BMJ 2012;345:e6885 doi: 10.1136/bmj.e6885 (Published 16 October 2012)
Competing interests: None declared
Aalborg University, AAU-MENU, AC Meyersvænge 14, DK 2450 Copenhagen Sydhavn
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Food tax policies are good at raising revenues; reducing health inequalities should involve food supply policies.
Smed and Robertson raise a burning issue as most countries are considering the relevance and the cost-effectiveness of a tax policy on unhealthy food. They highlight the uncertainties of a food price policy in Denmark, ranging from misunderstanding of consumer responses to uncontrolled reactions of private firms, and complicated by the lack of an evaluation. Clearly, more studies are needed to assess the health efficiency of a food tax. Moreover, we think that the current debate on food tax policies has not paid enough attention to the role of supply and to the major issue of health inequalities.
Taxes are made for revenues, health is only an uncontrollable side effect. It seems that the main—or even only—advantage of a food tax policy relies on the huge amounts of money it may generate in a context of restricted budgets and expanding health costs. For that sole purpose and without any nutritional aims nor use for health policy funding, taxes on soft drinks and some snack foods were introduced in most US states for over 50 years. In line with this position, a tax on soft drinks was introduced this year in France, with the aim of raising revenues to lower agricultural labour costs. With more focus on nutritional purposes by supposedly directing revenues to health costs, and by anticipating changes in consumer behaviour, Hungary (1) and Denmark (2) provide the first large-scale experiment fields for taxes on unhealthy foods.
As suggested by Smed and Robertson regarding the Danish experience, while food taxes are good at generating revenues, favourably influencing consumer diet and heath behaviour through food prices is a bold attempt. Both sufficient sensitivity to prices and healthy food substitutions are required to improve food choices with a food policy, and none of them were demonstrated. In addition to the limitations of a food tax policy already raised by Smed and Robertson, other concrete difficulties must be acknowledged such as the high variability of responses to a variation in food prices, depending on the population and the level of aggregation of taxed products. Moreover, to get a real change in behaviour and impact the diet, the policy should concern a wide range of foods, including foods consumed away from home. The main justification for a food tax is to modify the relative price hierarchy of foods to facilitate the fulfilment of dietary recommendations. Indeed, the current structure of food prices does not favour healthy food choices because foods with good nutrient profile are generally more expensive than less healthy foods, and the price gap is huge: 1 calorie from fruit and vegetables is 5 times more expensive than a calorie from other foods(3). Therefore tax levels must be sufficiently high (20 to 50%) to counteract the unfavourable food price hierarchy, but this will more strongly affect the poorest. Worsening social inequalities through a nutritional tax is certain because of a higher budgetary share of food among low income consumers. Consequently, unhealthy food taxes meet the solid prospect of generating resources with a disproportionate burden on lower socioeconomic consumers, and as a probable side effect, possible gains or losses in health. In addition, it is not because a Danish study found that poorer consumers were more responsive to prices (4), that the evidence is strong enough to generalize such conclusions. Very few works studies took into account different levels of income and/or education in the sensitivity of consumption or health indicators to food prices. The regressive impact of food taxes is often acknowledged in the literature, but the inequality issue embedded in taxation is not sufficiently raised up. The hypothetical higher reduction of disease among poor people linked to their higher morbidity claimed by Mytton et al.(5) to justify the tax can be reached more adequately through other policies. Though worsening (see last figures of OBEPI surveys on obesity in France), inequality has not been a major issue; it should be a key factor when designing health policies (6).
How can we integrate the reduction of health inequalities in the design of food policies? Targeting the lower income population, which is more at risk in terms of morbidity and unhealthy food choices, through specific policies is possible (subsidies in form of coupons and lower food prices can be implemented in specific circuits such as social groceries; targeted information and education programs), but it can be also reached with general policies.
Emphasis has been placed mainly on the responsibility of consumers. Let us share it with the food industry and involve the supply side. Recent evidence from both France (7) and the US (8) shows that the food offer matters, with significantly higher obesity rates found among shoppers in supermarkets selling low-cost foods (even after adjustment for many individual and contextual variables). Generalizing the implementation of food taxes will add to a trend of increasing food prices, pushing the poorest to look for cheaper options, or to cut off healthy foods budget. It will encourage the segmentation of the market between branded goods and low-cost substitutes. Yet, we have insufficient evidence to affirm that there is no link between the price of a food and its nutritional quality, within a given category of food products(9;10). This may well depend on the level of processing of the products. We therefore advocate for more studies on the relationship between price and food quality, conducted with similar methods and definitions. Public intervention should then focus on strong incentives for the development of good quality low cost products, in order to make sure that a varied range of products with good nutritional quality is accessible on the market. This can be achieved through voluntary agreements of private firms, which have begun in UK and France with encouraging results. Large scale distributors may be engaged in nutritional improvement of generic brands representing an important volume of sales (http://www.sante.gouv.fr/les-chartes-d-engagements-de-progres-nutritionn...). To speed up favourable food reformulation, why not use more coercive means, through regulation for instance? Due to the wide market it reaches, added to its capacity to target mostly lower socioeconomic groups, the intervention on suppliers seems to be an efficient tool that has to be added to specific programs on the consumer side. Let us prefer a policy with a large scale impact and a positive effect on inequalities, to a regressive nutritional tax.
1. Holt E. Hungary to introduce broad range of fat taxes. Lancet 2011;378:755.
2. Smed S. Financial penalties on foods: the fat tax in Denmark. Nutr Bull 2012;37:142-7.
3. Darmon N, Darmon M, Maillot M, Drewnowski A. A nutrient density standard for vegetables and fruits: nutrients per calorie and nutrients per unit cost. J.Am.Diet.Assoc. 2005;105:1881-7.
4. Smed S, Jensen JD, Denver S. Socio-economic characteristics and the effect of taxation as a health policy instrument. Food Policy 2007;32:624-39.
5. Mytton OT, Clarke D, Rayner M. Taxing unhealthy food and drinks to improve health. BMJ 2012;344:e2931.
6. Marmot M, Allen J, Bell R, Bloomer E, Goldblatt P. WHO European review of social determinants of health and the health divide. Lancet 2012;380:1011-29.
7. Chaix B, Bean K, Daniel M, Zenk SN, Kestens Y, Charreire H et al. Associations of supermarket characteristics with weight status and body fat: a multilevel analysis of individuals within supermarkets (RECORD study). PLoS.One. 2012;7:e32908.
8. Drewnowski A, Aggarwal A, Hurvitz PM, Monsivais P, Moudon AV. Obesity and supermarket access: proximity or price? Am J Public Health 2012;102:e74-e80.
9. Cooper S,.Nelson M. 'Economy' line foods from four supermarkets and brand name equivalents: a comparison of their nutrient contents and costs. J.Hum.Nutr.Diet. 2003;16:339-47.
10. Darmon N, Caillavet F, Joly C, Maillot M, Drewnowski A. Low-cost foods: how do they compare with their brand name equivalents? A French study. Public Health Nutr 2009;12:808-15.
Competing interests: None declared
Inra, French National Institute for Agricultural Research, UR 1303 Ivry sur Seine and UMR 1260, Marseille, France
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Smed and Robertson bring some welcome economic realism to the idealistic proposals by public health specialists for taxes on "bad" foods. They consider the counter-strategies adopted by both consumers and companies. They are admirably candid in acknowledging the absence of evidence that such taxes improve health. But...
They never mention the politics of the matter. You would never know from their article that Denmark, where they both work, is in the middle of a debate to repeal the fat tax, introduced to such acclaim among nutritionists, only a year ago.
Nor do they mention similar negative political reactions elsewhere, like the controversy over the "pasty tax" in Britain, or the rejection of soft drinks taxes all over the US in 2010.
Like good academics, they propose more research, ever more detailed economic studies. But they never consider the obvious practical question: why are "health" taxes so unpopular with voters and politicians in the real world?
The morale of the story: you cannot write seriously about policy without writing about politics.
This was a commissioned article. The BMJ should commission a second piece from these authors next year, when the Danish debate over fat taxes has concluded. Living in Copenhagen, they are well placed to provide a detailed, objective report on how nutrition policies can fail, as well as succeed.
Competing interests: None declared
London Metropolitan University (Retired), 28 St Paul Street, London N1 7AB
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