Tackling Fast Food Habits—With a Tax?

August 25, 2009 07:00 AM
by Liz Colville
A tax on fast food appears to be gaining ground as one means to funding the health care overhaul.

Evidence of Consumer Support for Tax

A Kaiser Family Foundation survey conducted in July indicates substantial consumer support for a tax on junk foods such as chips, cookies and candy, the Los Angeles Times reports. Most survey respondents—55 percent—said they "strongly favor" or "somewhat favor" an "increase in tax on unhealthy foods," according to the report, printed on the Kaiser Foundation Web site. Slightly fewer respondents—53 percent—favored a tax on sodas.

"[S]uch taxes are needed to ensure that rising obesity rates don't cause the average American life expectancy to fall for the first time in history," the Times writes, citing a report by the Urban Institute called "Reducing Obesity: Policy Strategies from the Tobacco Wars," also released this summer.

"We are killing 100,000 people per year, so something needs to get done," one of the study's authors, University of Virginia pediatric cardiologist Arthur Garson, told the Times.

Garson and his team propose a "10 percent tax on fattening foods" based on a model developed by the British Food Standards agency, according to an abstract of the study. This "would yield more than $500 billion in revenue over ten years," the team writes. "If combined with a subsidy that lowered the price of fruits and vegetables by 10 percent, the net revenue would exceed $350 billion."

Opinion & Analysis: Pros and cons of "sin taxes" on food and drinks

But the opposition to the tax argue that the poor will be the "hardest hit," as writer Julie Cochrane told the Times.

Indeed, a segment of the food industry documentary "Food, Inc.," released this year, features a mother who admits to buying fast food frequently because it is cheaper and less time-consuming for her family. "There’s not much room to argue with her," writes the Boston Globe's Wesley Morris in a review of the film. "Almost everywhere, a pound of broccoli costs more than anything on the McDonald’s value menu."

But health care comes into the picture as it is revealed that the woman's "husband is a diabetic whose diet, like a lot of Americans’, includes foods loaded with high-fructose corn syrup ... the mother is in a bind since they have to pay for his medical needs, in addition to their other expenses," Morris explains.

But the fast food tax would raise money to fund health care expenses and "offset" the "imbalance" created by expensive healthy foods, says the Times' Karen Kaplan, arguing that the "logic" of the tax "seems clear." It could change the situation for that mother and millions of other Americans in the same boat.

In May, the Senate Finance Committee proposed "sin taxes," specifically on alcohol and sodas, as one way to fund the Democrats' health care overhaul. Under the committee's plan, the beverage taxes would raise $113 billion over 10 years. For the consumer, it would amount to "3 cents per 12-ounce can of sugar-sweetened beverage and an excise tax of about 14 cents per bottle of beer or glass of wine," according to the MoneyWatch article, "What Will Health Care Reform Cost You?"

But the author, Michelle Andrews, echoes the argument that "sin taxes tend to fall disproportionately on poor people, who have less ability to pay taxes in the first place." The proposal is winning support in light of reports like the Urban Institute's that show how much obesity-related medical care costs. But even if people do change their habits due to such taxes, the resulting savings "are hard to quantify and may be offset by Social Security and Medicare costs attributed to people living longer," Andrews adds, something the Congressional Budget Office has also noted.

Kaplan notes that "two-thirds of states now impose a modest soft-drink tax." But the reality, she says, is that "[t]o make a significant dent in escalating rates of obesity, taxes would have to be steep and widespread." In other words, drinks taxes would have to include other sugary beverages, not just sodas. Several studies aren't too promising, and a real-world example, Maine's 5.5% snack tax, illustrates the challenges of passing such a tax.

"Enacted to help close a budget gap," Kaplan explains, the Maine tax "lasted 10 years before it was repealed under pressure from angry voters. Despite the price hike on such items as ice cream, hot cocoa, cake, cookies and pudding, Maine's adult obesity rate doubled from 10% to 20% while the tax was in effect."

Related Topic: Nutrient-Enriched Snack Foods Entice American Consumers

"Functional foods" featuring added nutritional ingredients, also known as "neutraceuticals," appear to be enticing American consumers in great numbers, according to a recent Pricewaterhouse Coopers report. But these added benefits are just masking or glorifying what is ultimately junk food, some experts say.

The foods in the PwC report include sugary granola bars, calcium-enriched juices and ice creams, caffeine-laden products that promise to boost energy and many others. They appear to target consumers who want to achieve the health benefits of nutritious foods without drastically altering their dietary habits.

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