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Taxing fats to subsidise fruit and veg is a fiscal option for public health benefits – University of Reading

UK diet and public health would benefit from the positive impact of a fiscal policy of combined taxes and subsidies on food, according to researchers from the University of Reading's School of Agriculture, Policy and Development.

Models of Nutrient Demand, Tax Policy & Public Health Impact₁, a Report produced from a three-year University of Reading project funded by the Rural Economy and Land Use (RELU) Programme has just been completed (October 2008). The tax scheme focused on sources of saturated fats, with the income from the 'fat tax' used to subsidise fruit and vegetable consumption.

Diet is widely recognised to have a major impact on health. Epidemiological studies have shown that excessive intake of saturated fatty acids, for example, are linked to increased risk of coronary heart disease and high cholesterol levels. On the other hand, evidence indicates that fruit and vegetable consumption has a protective effect against various cancers, diabetes, and stroke.

Professor Bruce Traill, University of Reading, said: "Affordable convenience foods, alongside changes in work and lifestyle, have had dramatic changes in diet and consequently health in recent decades. This trend has imposed substantial costs on the NHS as well as lost productivity to the economy through days of work lost and early retirement due to ill-health. Policy makers are currently considering a 'system-wide' set of policy interventions to tackle the problem and recognise that taxes on unhealthy foods or subsidies on healthy foods could be a part of the system."

"A fat tax alone would inevitably be highly regressive, as indeed are tobacco and alcohol taxes. We looked at the possibility of combining a tax on the saturated fat component of foods with a subsidy on fruit and vegetables, thereby promoting healthy eating without imposing an excessive burden on either households' or the government's wallet."

Fat tax rates were calculated using nutrient conversion tables, price elasticities of demand estimated using the Expenditure and Food Survey and the saturated fat content of each commodity group. For every percentage point of saturated fats, the price of the corresponding group was increased by 1%. The tax revenue thus created was then redistributed as a subsidy on fruit and vegetables. Based on those variations in prices new consumption levels were computed for each food group in the analysis.

The tax scheme achieved its main purposes, namely reducing the consumption of fatty foods to the benefit of fruit and vegetables. Consumption of cheese, for example, would reduce by 20.2%, beef by 7.0% and eggs by 5.7% while fruit and vegetables consumption would increase by 9.2%. Intake of saturated fatty acids and cholesterol were down by 4.5% and 5.4% respectively. Other nutrients such as sodium and all categories of fats, as well as total energy intake would decrease, while protein and fibre would increase.

In terms of epidemiological consequences in the general population, the tax scenario would see a drop in the relative risk of conditions such as coronary heart disease and cancer, but there is evidence to suggest that these benefits will not be evenly distributed in the population.

The University of Reading has now received £171,000 National Prevention Research Initiative funding from the Medical Research Council (MRC)₂ for a project to investigate in more detail the simultaneous application of tax and subsidy policies on a wider range of diets by geographical region. The burden of the tax/subsidy combinations on different socio-economic groups will also be calculated.

Co-report author Professor Richard Tiffin of the University of Reading, added: "The RELU results have highlighted the impacts of a fiscal regime designed to address the dietary health of the nation. Despite the regime moving diets closer to official guidelines, a substantial portion of the population will still have nutrient intakes that are some distance from the guidelines

"We now hope to obtain more precise indications in the MRC results. Our objective is to broaden the scope of the study to the full range of food products and find whether certain combinations of tax and subsidy are particularly effective for those social groups whose health outlooks are poorest. Could this be achieved without placing a financial burden on the poorer groups?"

ENDS

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Notes to editors:

The Government's recent Foresight Report estimates the cost of overweight and obesity alone to be £7b per year and extrapolates it to rise to £45.5b by 2050.

₁Models of Nutrient Demand, Tax Policy & Public Health Impact - M.H. Arnoult, R. Tiffin & W.B. Traill, 2008 is available from www.relu.rdg.ac.uk/workingpapers&reports.html

The work was part of the project Implications of a Nutrition Driven Food Policy for the Countryside funded by 3 research councils, ESRC, BBSRC and NERC under the auspices of the Rural Economy and Land Use (RELU) Programme of research.

₂Medical Research Council project

The National Prevention Research Initiative (NPRI), a partnership of 12 research funders, has awarded almost £3 million in a second wave of funding for projects that aim to identify ways of preventing people becoming ill.

The NPRI was established in 2004 in response to the limited availability of funds for preventative research and the increasing prevalence of chronic disease and obesity in people living in the UK.

The initiative provides a dedicated funding stream for high-quality research aimed at preventing chronic diseases including certain cancers, coronary heart disease, diabetes and stroke. The principal focus in each study is on four health behaviours: physical activity, diet, tobacco use and alcohol misuse.