Fat tax?

Readers' Views No 240/241, December 2003
OECD Observer

Your account of obesity in OECD countries makes good sense and excessive calorie consumption is no doubt one of the main causes (“Weighty problem”, OECD Observer No 238, July 2003).

I am delighted the OECD focuses on health challenges, as these have a strong economic dimension, both in root causes of some obesity-related illnesses and in managing the consequences in terms of health care. So, apart from sport, exercise and dieting, as well as some tough company crackdowns on employee lifestyles, surely market-based policy solutions to deal with the problem would be valuable too.

I was surprised you did not mention this approach, as excessive consumption is a simple problem for economists to analyse. To tackle excessive consumption of tobacco or petroleum products, economists usually recommend increased taxes to reduce consumption.

Is it time for a food tax? Such a levy on high-calorie products, like sweet drinks, fast food and cakes, could be part of a solution to the obesity problem. Some might argue that such a tax would be regressive as it would affect the income of the poor relatively more than the rich. But since lower income social groups appear to suffer more from obesity than the rich, by eating more fast food for instance, it could be a well targeted tax.

The revenue from the tax, which could be targeted on particular types of food – by fat content for instance – could be earmarked to fund health care costs, and so lower income groups would benefit from it. Further, since a food tax could be just the right answer for slimming down the US public deficit, as well as some of its more weight-challenged citizens, a fat food tax could also improve the health of the global economy.

—Ben Mahilum, Hawaii, USA

©OECD Observer No 240/241, December 2003

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