Over the last few decades, many European countries have been fighting a losing battle, desperately fighting to minimize the impact of Obesity on their socialized healthcare programmes. Already public healthcare occupies a large portion of the national budget ( In 2016/17 NHS had budget of 107 bn pounds) and amongst the many solutions offered to minimize this scourge on our society, the idea of a sin tax imposed on sugary foods stands out as one of the more controversial picks. In this article I will examine the legitimacy of the argument both for and against this interventionist measure and evaluate whether we should treat sugary foods with the same caution that we would cigarettes or alcohol in one last attempt to save socialized healthcare from the ticking time bomb of the ever expanding first world country waistlines.
Overall the arguments for sin tax revolve around the idea that sugary foods and drinks are inherently detrimental to society in that their consumption carries a greater cost than is reflected in their price, and that this cost does not only affect solely the individual but the entire nation in question as that person’s health carries fiscal implications due to our systems of public healthcare. The overconsumption of a demerit good by an individual is paid for by the tax money of everyone else regardless of how careful they’ve been of their own diet and these costs are high and many.
Obesity means less days worked and more time in hospital which naturally hurts productivity in the economy as it is time spent not working at the person’s job. It also has serious fiscal implications as overweight and obese people need more medical attention that somebody in a healthy condition, this means the more overweight he population the larger the toll on the healthcare system. By 2016, 51.6% of the EU population was considered overweight or obese, and Britain; notorious for a very high rate of obesity, spent 6.1 bilion pounds on the NHS in 2015.
These statistics are incredibly daunting and so many people would suggest that a sin tax (tax on demerit goods) should be implemented on fast food and sugary foods as an increase in price should therefore see a decrease in consumption. This proposal, although attractive in nature, does have a huge flaw. taxes on goods are done as a percentage and unhealthy foods tend to be incredibly cheap. A whopping 25% tax on a 1.5 euro pack of crisps would only see a price increase of 37 cents, hardly enough to even be noticed.
On the other hand there is, in my opinion, a stronger argument to not indulge in sin tax, but rather to look to other methods of solving the problem. One of the large problems that sin tax fails to address is the impact of higher prices on less wealthy consumers. Many underprivileged people turn to fast food because it is cheap and filling and there is no healthy alternative that they could fall back on as healthy foods are notoriously more expensive, to impose a tax on unhealthy foods would force poorer consumers to spend money that they don’t have. Not only would this unleash a myriad of problems due to more people finding food unaffordable which would lead to lower living standards, effectively punishing the poor for the mere fact of existence.
Furthermore we encounter the one size fits all policy problems. When the government inflates prices of goods with the assumption that the supposed negative effects brought about by the consumption of the good are harmful to society. But this assumption is fallacious in nature as not all people are exactly the same. Take the example of a Mcdonald’s burger, it is widely considered to be unhealthy, however the negative impact brought about by its consumption would vary based on the consumer. An olympic athlete such as Michael Phelps, who consumes 10,000 calories a day and burns just as many would barely see any change to his body if he ate the burger, whereas an office worker with high cholesterol would be affected more. Which raises the question, if the negative externalities from the consumption of a product differ on the individual who consumed it, then why is it fair to charge the olympic athlete and office worker the same sin tax?
This train of thought, however, carries more ominous philosophical implications concerning economic freedoms. Essentially the imposition of tax on goods from any governing institution implies two things. That the Government knows what people should consume better than the actual consumers do, and that it would be justifiable for them to intervene in the market against the will of the consumers to essentially force people to spend in the government approved way. A rather daunting concept when thought about in depth. But then we must ask ourselves an important question, why would it be immoral for the government to intervene in fast food in this way when almost everyone can agree that government intervention is good when banning dangerous drugs or taxing and putting strict packaging laws on cigarettes. Fast food has many serious health repercussions if consumed incessantly, and recent studies have shown that obesity increases the risk of cancer as well as all the other symptoms we knew about (heart disease, fatigue, higher risk of depression). So what differentiates fast food from cigarettes that would justify government intervention by taxation in the latter but not in the prior?
In order to explain it properly we must return to the Michael Phelps analogy. If both Michael Phelps and the office worker began to smoke, the consequences would be dire for both despite lifestyle. This is because of two reasons; the first is addiction. cigarettes contain nicotine which quickly addict the consumer and make them physically dependent on them, and once addicted to a drug (in this case the nicotine) one can stop taking it, but they will be an addict for the rest of their lives, secondly the tar in cigarettes which sticks to the lungs can not be removed and will stay with the consumer for ever. Here is where we differentiate a burger from drugs. Fast food is not inherently addictive nor does it pose the same long term problems from a single consumption, but most importantly; the effects of a bad diet can be reversed with exercise whereas cigarette addiction, alcoholism or even heroin addiction take a toll on the consumer that will be felt until the day they die.
So finally we must ask ourselves, how do we solve this problem? If a sin tax would be immoral, then what other measure could we use to fight the very serious threat of obesity? The answer is that like most complicated dilemmas there is no one solution that would rapidly solve the problem, but there are many long term strategies that could minimize the threat.
The first would be to create a healthy eating culture, this can be achieved by putting a higher emphasis on nutritional education in schools as well as physical education and by regulating the quality of school foods since children are not responsible for their actions, heavy regulation of school foods and banning vending machines from public schools is completely reasonable and also it would be immoral to have tax money for public school funding pay for the foods which cause the obesity problem in the first place. this set of reforms would be key in solving the obesity problem since most obese or overweight people are that way because they learned unhealthy lifestyles and eating habits from an early age.
As for tackling the problem in the adult world, two possible solutions come to mind: choice architecture and information. The first proposal is rather strange and modern, simply mandating supermarkets to put healthy foods at the front. this has no effect on consumer choice as the same foods would be available a the same prices but because of our cognitive biases we are more likely to buy seems more approachable to us and studies have found that the mere act of putting fruits and vegetables at the front of the supermarket leads to a significantly higher rate of their consumption. Secondly, we should strive to make information more accessible to consumers eg, where the product was made, how much of the product would be healthy to consume on a monthly basis and of course nutritional information.
In conclusion the idea of a sin tax may sound appealing, but I am not convinced that it is the right way of tackling a problem which is much more deeply rooted in our habits and culture, and that there is no easy way of tackling such a large problem and that we must accept that slow and gradual change as consumers become self aware and newer generations develop better eating habits are the best way forwards.