Although innocent is a relatively young company (12 years old in 2011), it has a long history of campaigning for the reduction of VAT on fruit juice and smoothies. Both of these count towards your 5-a-day (fruit juice counts as one and smoothies count as two portions [1]), but apart from sweetened dried fruit, they are the only 5-a-day contributors which are subject to VAT. innocent has argued that reducing the cost of both through the reduction in VAT would result in an increase in consumption and get us a step closer to meeting an important public health goal.
The idea of using fiscal measures to influence eating habits, whether we’re talking about “fat,” “junk food,” or “soda” taxes, has been batted around for a while now. In fact, the first mention of a fat tax that I could find was from the 1850s where a tax on fat people was proposed as an alternative to income tax. An article in Punch Magazine commented that “those whom a tax on the corporation would principally affect, would be the mayors and alderman, also corpulent bishops, canons and pluralists: the very persons best able to bear depletion. Fat people, moreover, generally are the most eligible subjects for taxations, for nobody sympathises with them.”[2]
Fortunately, attitudes have moved on since earlier days: obesity is no longer considered to be a disease of affluence and although some airlines have toyed with the idea of taxing heavier passengers, the debate has largely focused onto taxing individual food and drink products according to their nutritional profile.
No doubt some people question the Government’s role to “meddle” with the food system however, obesity and diet-related diseases are generally regarded as market failures in that their costs are a burden on wider society. The infamous Foresight report on obesity estimated that in 50 years time, when every other person is obese, obesity alone will cost us £49.9 billion. [3] The use of fiscal policy to tackle diet-related diseases has also been backed by the World Health Organisation, and it is easy to think of other examples where the Government has intervened to correct the market, the most obvious being the use of taxes in tobacco control. [4,5]
The challenges that we would need to face in order to devise and implement such a system are as follows:
1. We would need an effective way of categorizing food and drinks according to their negative public health impact.
With this debate comes a whole minefield of questions around which foods and drinks should be subject to a “fat tax” (I should point out here that I use the term fat tax loosely to capture any tax system that is applied according to the nutritional content of a food or drink rather than according to the fat content per se). This might be some sort of nutrient profile like that used to determine what foods and drinks can be advertised to children. [6]
2. We would need detailed modelling research to identify any potential unintended consequences.
One study which looked at the impact of extending VAT at a rate of 17.5% onto the main dietary contributors of saturated fat found that such a policy could prevent between 1800 and 2500 deaths per year. [7] But a follow-up of this work, which substituted assumed for empirically determined price elasticities and which looked at the impact of the policy across the whole diet found that the decrease in saturated fat was offset by an increase in salt intakes, resulting in more deaths than the policy averted. [8]
3. We would need to consider the impact of such a system across all incomes.
As people on lower incomes spend a greater proportion of their income on food and drinks, fat taxes are generally considered to be regressive, impacting lower incomes the greatest. Whilst on the one hand this could be viewed positively as it is the lower incomes that carry the biggest burden of diet-related diseases, this could be overcome if the tax was introduced concomitantly with a subsidy on healthier food and drinks. This idea is similar to one of the recommendations made in a recent Orange Paper report from innocent, which suggested the Government look again at ways of making healthier food and drinks more affordable. [9]
Of course, whilst big, none of these challenges are insurmountable. The bigger question is the likelihood of the Coalition government considering the use of fiscal food policy, which I think given the current financial climate is highly unlikely. It would also be very un-like the Conservatives who have historically favoured food policies that encourage voluntary action rather than regulation. However, it’s interesting to note one could argue that fiscal policies could be seen as a form of “nudging” : a popular concept that the Conservatives backed in their Green Paper and the focus of a new unit set up by David Cameron. [10,11,12]
In their book, Nudge, Richard Thaler and Cass Sunstein support the use of taxes to act as incentives to encourage more environmentally responsible behaviour: “much of the time, the best approach to pollution problems is to impose a tax on the harmful behaviour and to let market forces determine the response to the increased cost.” [13] Thus using taxes to change the cost of food and drinks, does not restrict or edit the choice on behalf of the consumer rather it makes one choice more favourable over another, but ultimately the choice is left in the consumers’ hands.
Needless to say such a radical change to our tax system would face a huge mountain to climb with public opinion and the food industry lobby particularly critical of any system that classifies foods according to their public health impact. But surely it’s time to at least explore stronger food policy levers rather than rely too heavily on information and education campaigns to do the work?
Vanessa Hattersley is the in-house dietician for innocent drinks. The views expressed in this blog are entirely her own.
References:
1.Providing a smoothie is made with at least one portion of crushed fruit (80g) and then the second portion of a different variety of crushed fruit and/or fruit juice the Department of Health consider that it can count as two 5-a-day portions. This is more than fruit juice, which can count as one 5-a-day portion. Smoothies have a notably higher fibre content than fruit juice, providing on average 13% of an adult’s daily fibre requirement.
2. Lemon, M. (1852) Punch. Volume 22. London: The Punch Office.
3. Foresight (2007) Tackling obesities: future choices. 2nd Edn. London: Government Office for Science.
4. WHO (2003) Diet, nutrition and the prevention of chronic diseases. Geneva: World Health Organisation.
5. WHO (2006) European Charter on counteracting obesity. Denmark: World Health Organisation.
6. Department of Health (2011) The nutrient profiling model. Available from: www.dh.gov.uk.
7. Marshall, T. (2000) Exploring a fiscal food policy: the case of diet and ischaemic heart disease. British Medical Journal, 320, pp.301-305.
8. Mytton, O., Gray, A., Rayner, M. & Rutter, H. (2007) Could targeted food taxes improve health? Journal of Epidemiology and Community Health, 61, pp.689-694.
9. Innocent (2011) Making it happen: 5-a-day and healthy eating [internet]. Available from: www.innocentdrinks.co.uk/health
10. Thaler, R. & Sunstein, C. (2009) Nudge. London: Penguin Books.
11. Conservative Party (2010) A healthier nation. Policy Green Paper No 12 [internet]. Available from: www.conservatives.com
12. Hickman, M. (2011) “Nudge, nudge, wink, wink…how the Government want to change the way we think” [internet]. The Independent, 3rd January. Available from: www.independent.co.uk
13. Thaler, R. & Sunstein, C. (2009) Nudge. London: Penguin Books, pp.197.