Denmark’s fat tax is a real-world experiment that could help shape obesity prevention policies here in Australia, and potentially sweeten the palate for a soft drink tax.
Our obesity crisis is only set to worsen with one quarter of children overweight or obese, and more than 60% of adults falling into these categories. We live in an increasingly obesogenic environment where the availability of cheap, tasty and highly calorific food is having a major impact on rates of chronic diseases such as cancer, heart disease and diabetes.
The decision by Denmark to tax all products containing more than 2.3% saturated fat is bold indeed. Rarely do we get to see such policies played out in the real world and the opportunities to learn from this are very promising.
Taxation is always contentious and certainly it’s not a measure that should be applied lightly or in isolation. Obesity is a complex issue that requires a comprehensive approach addressing pricing, marketing, availability, labelling and education. However, we do know that tax works — food pricing has the capacity to shift consumer preferences towards healthier options, thereby improving public health outcomes.
Here in Australia important lessons can be learned from the impact of taxes on alcohol and tobacco. In both cases, increases in real prices have had the effect of reducing consumption, particularly among young people and adults with low income.
Deciding what to tax is fraught with debate. Denmark’s decision to focus on saturated fat was made after an examination of data on diets but there has been some disagreement as to whether this could work here in Australia.
Another option would be to identify the foods that contribute most to overweight and obesity. There is extensive evidence of a strong association between sugar-sweetened beverage consumption and BMI, overweight and obesity (among adults and children). And with no nutritional value whatsoever and high consumption it seems ripe for taxation — certainly evidence is emerging that price influences soft drink consumption. It has been estimated for example that a 10% increase in soft drink prices could reduce consumption by 8-10%. It has also been estimated that a 20% tax would reduce body weight by 0.7 to 1.2kg per year.
Of course the fear with a “fat tax” is that you target those who can least afford it — the highest consumers of unhealthy food and sugar sweetened soft drink are young people and those on low incomes.
That’s why any tax must be balanced with a subsidy on healthy food. The subsidy may apply to reduce the cost of fruit and vegetables to all consumers, or take the form of vouchers (similar to Food Stamps in the US) could be provided to low-income earners to purchase a basket of healthy foods each week. Subsiding healthy food would not only change behaviour, but would protect and improve levels of food security among lower socio-economic groups.
The National Preventative Health Task Force has recommended the government investigate options for taxing unhealthy foods and subsidising healthy foods.
Whatever lessons we learn from Denmark in the long-term that fact is a comprehensive review of taxation as it relates to food is overdue, and should be investigated as a priority.
*Jane Martin is senior policy adviser for the Obesity Policy Coalition