Health Impact of Taxes

on Foods High in Fat, Sugar, Salt

Franco Sassi PhD Imperial College London

WHO, Geneva, 4th-5th December 2017

What Are Taxes Aimed at?

• Tax as a signal to consumers and industry

• Reduce the consumption of a specific product

• Improve health by improving dietary quality

• “research on the overall nutritional quality of purchases is mixed

because of substitution effects” (Epstein et al. 2012)

• “Food substitutions are difficult to investigate and predict, and they

may hinder the effectiveness of taxes when the latter are not

carefully designed.” (Hawkes and Sassi, 2015)

Taxing Fat

• UK – “negligible” effects (Tiffin and Arnoult, 2011)

• France – “small and ambiguous” effects (Allais et al., 2010)

• Potential unwarranted substitutions:

o Increased sugar intake (Jensen and Smed, 2007)

o Increased salt intake (Mytton et al., 2007)

• Politically difficult and controversial:

o Hits products viewed as basic components of diet (meat, dairy, etc.)

o How bad is fat?

The Danish Saturated Fat Tax 2011-12

• Reduction in saturated fat intake from beef by 1.4% (with

increased consumption of low- and medium-fat cuts), and from

cream by 11.3% (Jensen et al., 2014)

• Overall intake of saturated fat reduced by 4% (Smed et al., 2016), along

with increased consumption of vegetables and salt, leading to a

0.4% reduction in all deaths from NCDs (modelled)

• Estimates of change in IHD risk vary from +0.2% to -0.3% (Bødker et

al., 2015)

• Lack of scientific consensus on health value of the tax key reason

behind repeal (Holm et al., University of Copenhagen)

Fat Taxes Work Best when Coupled with Subsidies

• Review of effects of population-level subsidies (Thow et al., 2010)

• Review of model-based studies (Eyles et al., 2012)

• Subsidy component has larger effect than tax component (Tiffin and

Arnoult, 2011)

• But is also more regressive (Lacroix et al., 2010)

Health Outcomes of Combined Tax and Subsidy (Cecchini et al., 2010)

Mass media camp

Worksite interv.

Physician couns.

School-based int.

Food labelling

Fiscal measures

Food advert reg.

Life years (thousands)

China India Brazil Russian Federation England Mexico South Africa

Combined Taxes and Subsidies: Distributional Impacts

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

high SES low SES

Disadvantaged socio-

economic groups will

benefit the most in health

terms because:

a) they are more price

responsive

b) they have a larger

prevalence of chronic

diseases and risk factors

DALYs Saved by Age Group

Source: OECD Health Working Paper 48.

Do Subsidies Alone Work?

• Good evidence on fruit and vegetable subsidies

• Sweden – wholegrain subsidies lead to increased intake, but

mostly in existing consumers, and also increased consumption of

salt and fat (Nordström and Thunström 2009, 2011)

• Risks in subsidising foods or nutrients:

o Increase in overall calorie intake

o Increase in unhealthy nutrient intake

o Unwarranted change in the overall balance of macro-nutrients

• Product subsidies vs. welfare subsidies – evidence of perverse

effects of food stamps in US

Taxing Energy or Energy Density

• Calorie tax – modelled, but never tried in practice; most efficient

option (Okrent and Alston, 2012), but not always most effective

• Several countries have taxed energy-dense, “non-essential”, or

“nutrient-poor” foods (e.g. Hungary, Finland, Mexico and others)

• Hungary evaluations positive, but largely qualitative and based on

surveys (self-reports) – the tax has led to substitutions towards

healthier products and product reformulation by manufacturers

• Mexico early evidence – consumption of taxed foods reduced by

5.1% relative to expected levels (-10.2% for low-SES households) in

the first year (Batis et al., 2016)

Taxing Energy or Energy Density

• Fast food prices leading determinant of adolescent body weight (Powell

et al., 2006)

• Price elasticity of fast food consumption -0.52 (Powell et al., 2012)

• Significant body of research based on laboratory choice experiments:

evidence that price incentives can improve overall nutritional quality

of food choices, but highly dependent on substitutions

Can we Tax based on Nutrient Profiles?

• Increasing focus on nutrient profiling to improve overall dietary

quality

• Studies combining nutrient profiles for different foods into an overall

score for diets show some degree of correlation with health

outcomes, but variable for different outcomes (Julia et al.)

• Norfolk EPIC study: no correlation of overall dietary score with CVD

and other health outcomes (Rayner et al.)

• Challenges in tax administration and political acceptability (industry,

trade organisations)

Conclusions

• Taxes on food and non-alcoholic beverages can:

o Give a signal to consumers and manufacturers

o Reduce consumption of taxed product

• So, they should focus on products that can be singled out as

unhealthy and of no or limited nutritional value

• Using taxes to improve nutritional quality of overall diet is much more

challenging, and we may not have the tools and the political drive

required to do it today