Fat Tax, Why Not?


Is there really a difference between Joe Camel and Ronald McDonald?

The knowledge of the negative impacts of moderate to high consumption of junk food on health are now running parallel to our knowledge of the impacts of smoking on health 25 years ago. The parallels are scary. The first lawsuits have been called frivolous. Individual responsibility and consumer choice/freedom advocates are paraded in front of the cameras; not to counter the facts, but to let us know it is our right to make poor dietary choices. As the debate rages on the scientific evidence and the bodies are piling up.

I can find no credible research that says that moderate to high consumption of calorie dense, low nutrition foods is good for you, or even, not harmful. Finding research on the effects of calorie dense, low nutrition diets is not difficult.

American Dietician Association – Fact Sheet on Healthy Eating on the Run
Government of Ontario – How To Read Nutrition Labels
Heart-Health Canada – Foods To Avoid

If we know with reasonable scientific certainty that junk foods are bad for us, why are we not taking action? Why have we not banned them, taxed them, or at least stopped advertising to our children?

Considering advertising may provide some answers. Junk food is big BIG business. I’ve stolen from Dr’s blog HealthHabits, his entry “Your Kids Are Being Targeted“, and here are some quick numbers on the advertising spending of the fast food and junk food manufacturers in the United States alone.

In short the Federal Trade Commission Reports that the nations largest food and beverage companies spent $1.6 Billion per year advertising products – especially carbonated drinks – to kids.

Here is the question for me, if America’s 44 largest food and beverage companies have $1.6 Billion dollars to spend on advertising each year, why should we not incrementally tax their products?


Before I get into this debate let me say that I am coming at this question from a Canadian perspective. As I see it there are three key differences in Canada that concern this debate. First, we have universal health care which we pay for through our income tax system. Second, we have controlled government-regulated access to alcohol and (less so) cigarettes. Third, we have mandatory food labeling.


Fat Tax, Twinkie Tax, Junk Food Tax. What I am referring to here is a tax that would be placed on high calorie, low nutrition value foods. Not a tax on individual people who are above a certain BMI or Body Fat Percentage.

    1. An Economic Dis-incentive to purchase junk foods.
    2. Create an Economic Incentive for the manufacture and production of more healthy food options
    3. A revenue stream that can be re-directed into public nutrition education, health care, healthy food subsidies, healthy food subsidies for low income households
    4. A reduction in the social acceptance of junk food consumption.

1. Economic Disincentive to Purchase Junk Food. A tax placed on the manufacture of calorie dense, low nutrition “junk food” has two potential outcomes. It may encourage the manufacturer to produce less junk food as it will now be more expensive to produce. Or, the manufacturer will pass the cost onto the consumer. If the cost is passed onto the consumer there is a wide body of research which shows that junk food is largely an impulse purchase item. Impulse purchase items are highly price sensitive, and, if the price is raised on impulse purchase items then it is reasonable to assume a decline in the rate of purchase.

2. Economic incentive for the manufacture and production of more healthy options. As the forced labeling of Trans Fats came in, there was a scramble by manufacturers to reduce and eliminate Trans Fats from their foods, then splash the news all over their packaging. As knowledge of the negative impacts on health of fast food has spread, fast food chains have increasingly offered menu items that at least appear to be healthier such as salads, soups, apple slices, wraps, veggie burgers etc… Forcing food items to be identified as junk food would create an economic incentive for manufacturers to healthy up their recipes or provide more health conscious options. This would work particularly well if revenues from junk food taxes were used to subsidize the cost of healthy foods.

3. Creating of a Revenue Stream That Can Be Re-Directed. If a new tax is created there are several options for the use of this new revenue stream. First, and foremost for our tax-sensitive citizens this new revenue stream could be tax-neutral. Tax shifting and tax diversification are both very desirable options to avoid continued tax burden on income and property taxes. If we do not opt for a tax-neutral solution, then revenue can be used to create education programs for our public or our children on better nutrition, dollars from the junk food tax could be re-directed into the anticipated health care needs of an increasingly obese population, a three tiered food ranking could be created where junk foods are subject to tax, foods that do not fit the junk food description are tax neutral and foods that are considered high priority for healthy diets could be given tax rebates, or we could re-direct the tax revenue into healthy food allowances or healthy food subsidies for low income families. There’s lots of ideas.

4. Making Junk Food Less Socially Acceptable. It took the Anti-Smoking advocates 25 years, limitations on advertising and many increases on taxation to reach a point where smoking is now increasingly socially unacceptable, and for the first time we are hearing reports of declining smoking among 18-24 year-olds, typically the highest category. In the long run the effects of a junk food tax are not to make people who are currently addicted to or heavy users of junk food reduce their consumption, but to make new entry into this market less desirable with more barriers to entry.


The primary arguments that I have found against a fat tax are as follows:

    1. Will Not Reduce Obesity.
    2. Hurts Civil Liberties.
    3. Impacts The Poor.

1. Will Not Reduce Obesity. A tax alone will not reduce obesity rates, what is needed is more education on nutrition and exercise, better food labeling, and better health and nutrition programs in early childhood education.

2. Hurts Civil Liberties. Big Brother, The Government, and no one else should have a say on what I do with or put into my body. The Government is stepping into an area of private life where it does not belong, and it will cost the government billions of dollars to implement this tax. It is a waste of time and resources for an infringement on civil rights that should not take place to begin with.

3. Impacts the Poor. There is a socioeconomic relationship between obesity and poverty. Fatty junk foods cost the least. People with lower incomes are likely to have had or have access to less education and will not be as informed on food choices. By imposing a tax on junk food we would be taxing those who can least afford it, and who do not have the same tools to make nutritional decisions as upper classes.

REBUTTAL (Yeah, But…)

1. Part Of The Solution.

A tax on junk food will not single handedly reduce obesity. One tax increase won’t likely impact obesity at all in our generation. If there is a tax increase tomorrow, someone is not going to walk into McDonalds and think “$0.50 more for my Big Mac! I’m gonna go get that $6.99 free range organic chicken wrap down the street instead!“.

To reduce the rate of obesity and hopefully reverse it we need: better food labeling; better public education; more food, nutrition and exercise education for our children; and, less junk food advertising… In short we need a paradigm shift.

A junk food tax can be part of that solution. It can signal societies recognition that junk food, like cigarettes and alcohol are items that society considers indulgences and not entirely socially acceptable. The tax signals that more caution should be used when consuming these products than your average produce isle banana.

Claiming that the junk food tax should not be implemented because it will not single handedly solve the obesity epidemic is like saying there should not be a legal drinking age because there is still underage drinking.

2. Leave Some For The Next Generation.

The environmental movement has made it mainstream knowledge that what we do in this generation will impact the next generation. Every election in Canada Health Care is the number one issue. As we watch the baby boomers retire and consider the increasing demands on our health care system as better geriatric infrastructure and care is needed for our increasingly elderly population we need to consider what can be done to make sure that our health care infrastructure does not crumble.

Health Care is only part of the overall health formula. Increasingly research shows us that for every dollar we spend in prevention we save three dollars in health care costs. No one should be denied health care, but as long as we are sharing the costs of caring for our sick, should we not also try as much as possible to prevent our population from getting sick. This makes both humanitarian and economic sense.

3. Teach A Man To Fish.

The mark of a good society is how it treats is poorest citizens. We know that if you use junk food from moderate to heavy levels you are more likely to be obese, and obese people are at much higher risks for a very long list of diseases and health complications. To argue that we should not impose a junk food tax because it would hurt the poor the most, since they consume the most junk food to me is a complete deflection of the real problems in poverty.

If we accept that poor people are eating junk food because they cannot afford healthy food then we need to address why poor people cannot afford healthy foods. We need to provide better funding to our food banks, we need to provide more direct to family assistance, and we need to look at the cost margins of buying healthy vs. junk foods.

If we accept that poor people eat junk food because they don’t have the education to make better food choices. We are first making a huge assumption about the level of intelligence of lower income people. If we want to proceed down this path the solution is not to provide them with the tools to continue to make poor nutritional choices but to provide them with education programs in the communities, education programs in the schools and after school programs, pre-natal and post-natal nutritional information, and provide primary care workers nutritional educational tools.


I don’t see the downside to the junk food tax. We are going to need to generate revenue from somewhere to pay for our increasing health care needs, and I would rather have that revenue cost come from the manufacture and sale of junk foods than from the “Health Care Premium” recently imposed by the McGuinty Government.


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