Using fat tax to change food consumption behaviour

Using tax as a tool to alter consumer food preferences has been recommended by the World Health Organisation. Mexico provides us with proof that levying additional taxes on non-essential food items that are rich in fat or calories can effectively alter food choices. The country witnessed a 5.1 per cent dip in consumption levels in foodstuff that had more than 275 kcal/100 g energy density following the imposition of an 8 per cent levy in 2014. Sugar-sweetened drinks saw a 12 per cent drop in intake at the end of the very first year the tax was introduced. In this context, Kerala’s decision to slap a 14.5 per cent tax on certain calorie-rich food items such as pizzas, doughnuts and pasta sold in branded restaurants may seem like a step in the right direction. But it bears the stamp of being little more than a political gimmick. For once, such foods sold by branded restaurants, consumed by the higher middle and upper classes, are a very tiny part of the problem of poor food choices for the State’s population. Ignoring a wide variety of high-calorie food items and focussing on a few is no more than tokenism. The revenue that Kerala hopes to mop up from this — Rs.10 crore — is also meagre.

Taxing ‘bad’ foods should be accompanied by cross-subsidies of healthy and wholegrain food items.

If the State is serious about reining in consumption of unhealthy food, then there are several measures it should quickly adopt.The first is to set a threshold limit for fat and/or calorie and tax all foods items that are above this limit. Bringing sugar-sweetened drinks and refined products under the taxable product list should be a priority. There is no reason why packaged food items that have high salt content should not be additionally taxed. Indians are known to consume a few times more than the WHO’s recommended limit of 5 grams a day and most of it comes from packaged food items. Similarly, what excuse can there be for not charging a very high rate of tax on food items that contain trans fats? There are a number of food items sold in India that contain as high as 35-40 per cent of trans fats. Trans fatty acids, made through the process of hydrogenation of oils, which improves the stability or shelf life of the foodstuff that contains them, pose serious coronary risks. Taxing ‘bad’ foods should be accompanied by cross-subsidies of healthy and wholegrain food items. Only a holistic approach such as this will be effective in making a real change in our food consumption behaviour. At the same time, the food industry too should play a significant role in promoting healthy diets.  According to the WHO, the food industry can “reduce the fat, sugar and salt content of processed foods, ensure that healthy and nutritious choices are available and affordable to all consumers, and restrict marketing of foods high in sugars, salt and fats, especially those foods aimed at children and teenagers.”

Published in The Hindu on July 13, 2016