Taxation for junk food has many supporters and an even bigger audience of opponents. Supporters of this initiative declare the health benefits of potential consumers of junk food and select the most optimal taxation methods, such as excise or product tax. Scientists and experts are proposing introducing the tax at the federal level, taking into account the advantages of the initiative and an opportunity to reduce tax differences between states. This paper aims to study junk food taxation in the US, define the related problems, present solutions, and provide recommendations.
The Essence of the Problem with Unhealthy Nutrition
One of the major problems associated with the widespread consumption of fast food is the severe harm that unhealthy diets can cause to human health. Trans fats, found in fatty meats and fried foods, cause cholesterol to build up in blood vessels, leading to heart disease and stroke. Trans fats and other elements found in red meat are also a predictor of cancer while eating fresh vegetables and fruits, which have antioxidant properties, reduce the risks.
There are supporters of the taxation for junk food worldwide, including countries such as South Africa, Hungary, Mexico, and Canada. Opponents of this innovation argue that most of the taxation burden will be placed on the disadvantaged groups of the population, making this initiative regressive. In addition, opponents do not see the potential for reducing harm to health for the general population, noting the low flexibility of people about food choices. Some perspectives also focus on alternative ways of communicating, such as warning notices.
The public actively discussed junk food taxation since it was first suggested in the mid-2010s. Puiu (2018) presents CDC statistics that “36.5 percent of American adults and roughly 20 percent of children ages 6 to 19 are obese, and more than 70 percent of all men and 60 percent of all women in the United States are overweight” (par. 3). Obesity and overweight are risk factors for cardiovascular disease, cancer, and diabetes. In other words, an unhealthy diet shortens life expectancy as it increases the likelihood of developing deadly diseases, which occupy the first place in population mortality. This trend is relevant globally, as countries in Europe, Africa, Asia, and Latin America present similar health indicators associated with unhealthy diets.
Such data explain that healthy eating and reducing the use of unhealthy foods among the population is essential for the nation’s health. Moreover, healthy eating is one of the 17 goals of the UN’s sustainable development (“The 17 goals,” 2021). Healthy nutrition is also one of the issues regulated by the global governance that monitors compliance with standards in access to water, green energy, and food, including healthy eating and diet.
In the EU, negotiations are underway to introduce a tax on junk food, following similar taxes on alcohol and cigarettes. Experts note that according to WHO, “increasing tobacco taxes is the single most effective policy to reduce tobacco use” (“Should junk food be heavily taxed,” 2017, par. 6). Therefore the EU supports the idea of price regulation on potentially dangerous and harmful food. Stacey et al. (2017) admit that the introduction of excise taxes on tobacco, beer, and sugar-sweetened beverages in South Africa is highly effective and will undoubtedly lead to better public health. Therefore, monitoring the healthy nutrition of the world’s population is one of the critical issues in global healthcare and social care.
The Solution that Ensures Increasing Healthy Diets
Since the mid-2010s, negotiations were held at local, state, and federal governments concerning junk food taxation. Researchers from the College of Global Public Health, New York University, and the School of Dietetics and Policy at Tufts University studied the possibility of introducing a federal tax on unhealthy food. The scholars found it legal and administratively enforceable (Gallagher, 2018). Scientists have proposed an excise tax on junk food, which they find more appropriate than a sales tax for consumers. This decision allows to directly influence the producers of unhealthy food products without affecting the financial capabilities of consumers. It is a highly reasonable approach given criticism of the irrelevance of a sales tax that would hit the most impoverished groups and is considered by critics as a regressive solution.
Scientists also developed a scheme whereby regulators impose excise taxes according to product category and nutrient content category. Nutritional policies include strategies for improving diets, taxing prices for unhealthy foods and beverages, and introducing subsidies for healthy foods (Gallagher, 2018). A team of scientists from Tufts University has focused on developing tax strategies. Scientists evaluated the literature and concluded that harmful foods are generally classified into four categories. These are product categories, broad criteria of nutrients, specific nutrients, and calories. They also reviewed studies suggesting phased taxation with gradual increases in tax rates in line with nutrient declines.
Interestingly, the most frequently taxed product categories are sugar-sweetened drinks, sweets, meat products, sweet and savory snacks. At the same time, the target substances that are taxed are usually sugar, salt, and calories (Gallagher, 2018). It is noteworthy that the introduction of an excise tax was considered more legally expedient since excise taxes are levied on the production, distribution, or sale of goods, and the manufacturer decides what percentage of the tax will be transferred to consumers.
Tobacco, alcohol, and junk food excise taxes are popular in Hungary and Mexico. The benefits of a federal excise tax include keeping the tax viable in all states. A form of excise tax with a gradual increase as the nutritional quality of the product decreases will influence producers and motivate them to change the composition (Gallagher, 2018). Therefore, the phased excise taxation, which will apply to all manufacturers, is the best solution.
Criticism of the Solution and Problems Ingrained in It
The introduction of an excise tax on harmful products has received widespread criticism. In part, the critical observations are fair, but there are also opinions when experts do not make convincing arguments about why the excise tax on harmful products and substances is a bad idea. It is not known whether such critics are on the side of the junk food producers or conservatively meet new ideas. In both cases, criticism of the decision concerning junk food taxation should be carefully scrutinized. Recommendations for dealing with the health problems posed by unhealthy diets should be made with such criticism in mind.
Hoffer & Shughart (2018) note that selective taxes that apply to specific goods “do not meet many of the criteria for tax policy” (p. 59). Scholars argue that selective taxes that encourage consumers to make healthier choices “do not meet the criterion of neutrality” (p. 59). According to scholars, economists support tax-neutral policies that protect against distortion of consumer choice. Therefore, in their opinion, taxes on junk food violate neutrality and are unfair. Scientists note that “the cost of sin taxes tends to be borne most by people with low income, who tend to spend a higher percentage of their income on excise taxes” (p. 59). Therefore, this factor should be considered when making recommendations for optimizing junk food taxation.
Snowdon (2018) finds that taxes on food, sugar-sweetened beverages, tobacco, and alcohol are regressive. According to the scientist, these indirect taxes receive the largest percentage of income from the poorest groups of the population. Snowdon (2018) notes that taxes on tobacco and alcohol are regressive since smoking is more prevalent among low-income groups. Therefore, in scholar’s opinion, the ‘sin taxes’ imposed in the UK result in welfare losses in these groups that are incomparable with the perceived health benefits. Bird et al. (2019) believe it is unfair to loosen gambling, tobacco, and alcohol regulation. Scholars also report tendencies in public criticism of such code in Canada, as it is considered incompatible with a society based on rights. Scientists pay attention to the decrease in revenues from these excise taxes and note that these taxes will not cover social and healthcare costs.
Thom (2020) states that “lately paternalists turned their attention to meat, plastic bags, automation and carbon” (p. 153). According to the scientist, the taxation of these goods is a negative trend, despite the “supposedly justified tax externalities” like harm to the environment, health, displacement of workers, and climate change. The scientist believes that the experts who make tax decisions turn to “dubious social sciences” to justify the correctness of the decision and believes that taxes are not needed.
Recommendations, Counter Arguments, and Alternative Solutions
The criticism presented above causes skepticism since many experts do not present convincing arguments. On the one hand, Hoffer & Shughart (2018) argue that taxes on junk food do not meet the economic criterion of neutrality. However, scientists do not explain why economic neutrality should be a priority when the purpose of taxes is to preserve the health of the population, which will subsequently affect the increase in income, and therefore is not only ethically but also economically justified. In addition, today, there are few supporters of the opinion that the excise tax on tobacco should be abolished, as it violates the criterion of neutrality, especially given the abundance of data on the effectiveness of excise taxes to reduce the percentage of smokers.
On the other hand, Hoffer & Shughart (2018) rightly point out that sales tax for consumers can become a burden for the most disadvantaged category of citizens who predominantly buy unhealthy foods with high amounts of salt and sugar. Indeed, sales tax is not a far-sighted decision; however, the introduction of a federal excise tax, as suggested by Gallagher (2018), should primarily affect the financial interests of manufacturers and distributors and is unlikely to affect the final price for the consumer, given the competition between manufacturers. It is especially true since the proposed excise tax will be in the form of phased taxation, in line with the deterioration of the nutrient quality of the products being sold. This approach will allow manufacturers to change the composition of the products they offer on the market and make them more useful.
Snowdon (2018) makes a similar argument, noting that junk food taxation only affected the most impoverished populations in the UK. This argument can be seen in favor of the solution proposed by Gallagher (2018) since it considers the discussed risk. However, Snowdon (2018) makes some unfair arguments: for example, the scientist finds the tobacco tax regressive since the most significant percentage of smokers are from the poorest groups of the population. This argument is not sufficient to abolish the excise tax on tobacco. At the same time, this observation rightly draws attention to the need for additional policies on discouraging smoking in the underprivileged groups of the US population, since here, the majority of smokers are also representatives of the least financially wealthy citizens.
On the contrary, Bird et al. (2019) support the extension of the excise tax policy for tobacco, alcohol, and gambling and propose to ignore social trends when this regulation is viewed as an infringement of rights. Thom (2020) argues that taxes on meat, plastic bags, automation, and carbon are unfair, as their health and environmental damage is not a sufficient basis for taxation. This statement is illogical since harm to health and the environment is one of the principles of introducing excise taxes on goods. The scientist also states that politicians and legal experts refer to “dubious social sciences.” This argument is flawed since social sciences cannot by definition be called “dubious” without justification, and such explanations are unlikely to be found.
Given the counter-arguments set out above, it is recommended to support introducing a phased excise tax on junk food at the federal level. This decision will make it possible to monitor manufacturers, who will make constant changes to the composition of products, making them more useful and of higher quality to avoid additional taxes and maintain demand. Federal oversight will also ensure interstate equity when all entities are taxed on an equal footing. Reasonably important, the format of the phased excise tax presupposes a minimum financial burden for the final consumers.
The second recommendation is to promote healthy eating and new taxes on junk food to present the solution more positively, which it deserves. Junk food taxes are a necessary health measure, and the phased excise tax format protects the economic interests of consumers. This information must be conveyed to the general public to prevent the formation of hostile groups to the introduction of the tax since it affects the financial interests of manufacturers and distributors.
Interestingly, Boncinelli et al. (2017) consider informing about the composition of the product and the dangers of specific components on the packaging as an alternative to junk food taxation. However, scientists admit that the study results have shown little effect because consumers do not pay enough attention to warning labels. Therefore, the third recommendation is to implement warning labels, which are not a substitute for better taxation practices but can collectively add value. Consumers may not change their habits right away, but this communication policy will be beneficial over time. Noteworthy, the need to indicate harmful components in the product on the packaging will serve as an additional incentive for manufacturers.
Should More People Care?
Healthy nutrition is critical to wellness, improved health outcomes, and the growth of associated economic opportunities, such as finding higher-paying, challenging jobs and lowering health care costs. Even groups with minimal incomes can secure a healthy diet. Fresh food, which contains most of the nutrients, usually costs less than junk food. Therefore, the choice in favor of the latter is a consequence of advertising and added harmful substances such as salt, sugar, and flavorings that cause cravings for the product but do not provide the body with the necessary nutrients. The more people understand the onset of diseases and the healthy functioning of the body associated with nutrition, the more informed choices these people will make. Habits are a stable characteristic of behavior for most people; therefore, an information campaign should be unobtrusive, clear, memorable, and designed for an extended period of exposure of target groups to information messages.
Overall Impression
Overall, junk food taxation is an intelligent solution to unhealthy nutrition habits, which are a leading cause of deadly yet common diseases such as cancer, type 2 diabetes, and cardiovascular disease. People who eat healthy foods almost wholly reduce their risk of developing these diseases, live longer, and feel better. Therefore, the state must intervene and support a healthy lifestyle among citizens, even if this jeopardizes the interests of the manufacturers of junk food products.
Thus, the issue of junk food taxation in the US was discussed, the related problems were defined, and the solutions were presented. Junk food taxation is necessary to reduce the percentage of people who consume unhealthy foods and harm their health. Added sugars, salt, and flavors are addictive and must be taxed like tobacco and alcohol. The decrease in the use of unhealthy foods will come from introducing healthier alternatives on the market, which will be less taxed.
References
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Boncinelli, F., Gerini, F., Pagnotta, G., & Alfnes, F. (2017). Warning labels on junk food: experimental evidence. International Journal of Consumer Studies, 41(1), 46-53.
Gallagher, S. (2018). Junk food tax is legally and administratively viable finds new analysis. Web.
Hoffer, A. J., & Shughart, W. F. (2018). The theory and practice of selective consumption taxation. In For your own good: Taxes, paternalism, and fiscal discrimination in the twenty-first century (pp. 59-76). George Mason University.
Puiu, T. (2018). Junk food could be taxed like cigarettes or alcohol, researchers find.
Should junk food be heavily taxed like cigarettes and alcohol? (2017).
Snowdon, C. (2018). Of course, sin taxes are regressive. Institute of Economic Affairs Current Controversies, 5(63), pp. 1-12.
Stacey, N., Summan, A., Tugendhaft, A., Laxminarayan, R., & Hofman, K. (2018). Simulating the impact of excise taxation for disease prevention in low-income and middle-income countries: an application to South Africa. BMJ Global Health, 3(1), pp. 1-13.
The 17 goals (2021). Web.
Thom, M. (2021). Taxing twenty-first century sins. In Taxing Sin (pp. 153-176). Palgrave Macmillan, Cham.