Don't blame the snacker, blame the snack?
In the fight against rising obesity, policy makers looking to wield taxes as their weapon of choice should aim them at sweet-food producers and not the prices at the vending machine, say two economists at Iowa State University.
Hungary and Denmark approved new laws this year forcing consumers to pay more for foods high in fat, and similar bills are being discussed across the United States. Revenue collected is usually ear-marked for health care.
In Canada, a group called the Quebec Coalition on Weight-Related Problems pushes taxation on unhealthy foods, because "the scientific literature is clear: sugar-sweetened beverages are harmful to health."
Rather than promoting healthy activities, "junk food taxes" aim to discourage unwanted behaviour. For instance, this approach is already used on cigarettes, which Ontario taxes at a rate of 12.35 cents per stick.
Much analysis on the subject of so-called "fat taxes" has shown that small to moderate taxes on high-sugar or high-fat foods would have little impact on consumption. But if the goal is to reduce the amount of calories consumed in the food people are already eating, taxing producers makes more sense, according to research recently published in the journal Contemporary Economic Policy.
John Beghin and Helen Jensen, economics professors at Iowa State, and Zhen Miao, one of their graduate assistants, compared two policy options: an input tax or a consumption tax. (They looked only at sugar, not fat or other ingredients that can also contribute to unhealthy eating.)
Both taxes are regressive, as they -- directly or indirectly -- raise the price of food. Low-income people spend a higher portion of their money on food than high-income consumers, so any tax would hit the lowest income group the most.
Assessing a tax on sweeteners, such as sugar and corn syrup, at the input stage puts pressure on manufacturers to reduce the amount of sweetening ingredients.
A tax on higher-calorie sweeteners could also influence manufacturers to switch to healthier, lower-cost options.
Through their models, the economists found that the input tax approach passed on less cost to consumers than a direct increase at the checkout line, while also better reducing their calorie intake -- better for their wallets and their health.
The pain to consumers, though, would be small for either an input tax or a consumption tax. Though the cost of the input tax to the consumer would be about one-sixth the cost of the consumption tax, both amounts are less than 0.2 per cent of total income, the study says.
Some governments prefer the carrot to the stick. A federal Conservative tax credit aims to entice parents to enroll children in sports, aiming to fight obesity by boosting physical activity.
Others prefer just to push the sweet temptation out of sight. Ontario banned junk food in schools this year, and Calgary will do the same in 2012.
In a release from the university, the study's authors stress that they aren't necessarily advocating for a tax as the solution to rising obesity, but, they say, if policy makers are going to institute a tax, this is how to do it right.
"We are saying, 'Given that you are considering a panoply of tax instruments, and there is a possibility of a soda tax, is there a better way to use that idea?'" says Mr. Beghin in the release.