Fat Tax unfair to fat and thin taxpayers alike

Was this really the best ‘big idea’ the health panel at the 2020 Summit could come up with? A new tax – how original! – on beer and cigarettes, which will also be imposed on fast food, so that the government can spend the extra revenue on so-called ‘prevention’ programs.

What is new is the plan to hypothecate the tax to pay for a new public health bureaucracy – a National Preventive Health Agency. There is an alarmingly Orwellian role envisaged for this new body, which will reportedly enforce 30 minutes of exercise in sedentary workplaces. It will also be responsible for promoting a ‘healthy lifestyle’ message, even though this is already being disseminated by a formidable array of existing government and quasi-government programs and organisations.

Before we embrace this latest attempt to tackle obesity and ‘lifestyle disease’, the provenance and implications of the Summit proposal demand closer inspection.

For 40 years, Australian governments have been spending millions of dollars on public health campaigns educating people about the lifestyle changes they need to make to protect and promote their own health. Some sections of the community – notably the sort of middle class people who descended on Canberra last weekend – have heeded this message. They have been improving their diets and taking up exercise. But many other people – especially those concentrated in lower-income communities – have remained immune to all this advice and cajoling. Their resistance is largely responsible for what some health professionals want to call an obesity ‘epidemic’.

Rather than being a new proposal, the latest idea for a ‘fat tax’ has been a long cherished goal among public health experts in the universities and the health bureaucracies. Since nagging hasn’t worked, they are now determined to force the recalcitrant lower orders to modify their lifestyles by pricing them out of the fast-food outlets.

Those who support these ideas point to the success of anti-smoking campaigns where nagging, combined with higher taxes, has driven substantial numbers of smokers to quite the habit. But there are some important differences between getting people to stop smoking and getting them to reduce their intake of fatty foods.

One is that tobacco is a specific, harmful product. It is easy to define what is and is not a noxious substance. This is not the case with fatty food. Are all hamburgers to be targeted? Is every helping of chips to be put on the red list? Is all fried chicken verboten?

A second problem, linked to this, is that you can’t stop eating in the way that you might stop smoking. It is not realistic to expect people to cut all animal fats out of their diet, nor should we try. Unlike smoking, the problem is therefore one of degree – it is not a binary issue.

Thirdly, as the adverts remind us, every cigarette you smoke is bad for you. But this is not true of every burger you eat. Less than quarter of the population smokes, but the great majority of us eat chips at one time or another. So when the government tries to tax what it defines as ‘fatty foods’ it is using a scattergun, not a rapier. We are all going to be hit.

One of the big problems with a fat tax, therefore, is that it will not just target the unhealthy behaviour of the overweight or obese. It will also penalize people who have heeded the healthy lifestyle message and who eat fast foods in moderation. Consumers who are doing no harm to themselves (and who are certainly not harming other people, for there is no equivalent here to the issue of ‘passive smoking’) will be targeted. The thin and the fat will be taxed alike!

And there are other problems too. Because poorer people eat more fatty food than middle class people do, fat taxes are inherently regressive. As with taxes on tobacco, alcohol, carbon-based energy and gambling, a fat tax will be imposed on the poor by more affluent sections of the population who have taken up a different (and in their view, more ‘wholesome’) lifestyle.

Put bluntly, the main aim of a ‘fat tax’ is to raise the price of fast food so that lower-income communities with the highest rates of obesity will be unable to afford to eat so much ‘junk’. But unless the price hike is substantial, it won’t work. A recent British study concluded that get even a small impact on eating habits, a fat tax would need to be as high as 15 or 20 per cent. To work, it’s going to have to hurt some financially vulnerable people.

And where will all this money go? The 2020 Summit proposal is that it should be spent on health prevention campaigns. So all those burger-eating proles will pay more for their food so the middle classes can use the money to nag them more effectively.

Even this, though, is unlikely to work. Major reports in both the UK and Australia have found that, despite decades of spending on prevention campaigns, levels of physical activity in these countries have not risen and obesity levels have continued to spiral. Yet undeterred by these failures, the faithful gathered at the Summit want to spend even more.

Nobody questions that governments have a legitimate role to play in informing the public about the lifestyle changes they need to make to reduce the risk of ill health. The point is that while governments have fulfilled this obligation many times over, many people continue to ignore this advice. Forcing people to pay a new regressive and unfair tax to pay for ‘prevention’ will only lead to even more taxpayers’ money being wasted promoting a lifestyle message to people who have chosen to disregard it.

Dr Jeremy Sammut is a Research Fellow at the Centre for Independent Studies, his paper False Promise of GP Super Clinics will be released by CIS in April.