Is a ‘fat tax’ the most appropriate method of addressing the issue of obesity in the UK?

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Is a `fat tax' the most appropriate method of addressing the issue of
obesity in the UK?
A fat tax is a tax that is placed upon fattening foods ­ it is an example of Pigovian taxation, a
fat tax aims to discourage unhealthy diets and offset the economic costs of obesity.
Obesity is a massive problem amongst adults and children in the UK. Obesity increases the
risk of developing health problems e.g. heart disease and some cancers which have massive
impacts on the economy. In 2007 it was estimated that the annual costs of all
obesity-related diseases reached an estimated £17.4 billion. Also almost 20 million working
days a year are lost to obesity-related illnesses, which are estimated to cost UK businesses
about £4 billion. Therefore there is a massive economic justification for the government to
intervene in an attempt to reduce obesity levels. "In Europe, governments spend
approximately 5% of total national health care costs on obesity" says Professor Andreu
Palou. "Obesity is rising in epidemic proportions."
One country is leading the way in the battle to fight obesity ­ Hungary. A $0.037 tax is being
put on food with high fat, sugar and salt content. The Hungarian government believe that
the tax will not only make people think twice about their health but it will also make
unhealthy people contribute more to the economy ­ as it is them that are filling the
hospitals.
The law of demand suggests that if the price of the product goes up then the demand will
fall, therefore this suggests that the consumption of fatty foods will decline. The tax will put
the issue into the forefront of people's minds and therefore make them think twice about
purchasing such products. Also the extra money could be used by the government towards
research and anti-obesity programs. Another advantage of the tax is that healthy people will
not be penalised therefore creating a large incentive to becoming more healthy.
On the other hand, the tax would be hugely damaging to food producers who sell fatty
foods as they would suffer from lower consumption, assuming that the tax has its desired
effects. Additional taxes lead to jobs cuts in the affected businesses and contribute to a
degradation of consumer purchasing power. Industries will argue that they should not be
penalized for supplying what consumers want. Also, the fall in demand for fatty foods will
increase the demand for healthy food which could potentially increase prices. Put simply, a
fat tax could make it overall more expensive to eat, healthy or not. This would really hit
lower income families hard who spend a lot of money on their food.
Some may also argue that just taxing fatty foods will not be enough for the obesity problem
to be solved, as fitness and exercise is also a vital part of keeping the body healthy. In
addition, it would be unfair to tax those who do already have a healthy lifestyle ­ people
should be responsible for their health. "Scientific research shows that taxation is not an
effective instrument in addressing consumer behavior and will have no impact on obesity
rates" says Lisa McCooey (Director of communications for Food Drink Europe) "consumer

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The main reason that our government will want to carry out this fiscal policy is to reduce the
exponentially growing strains and costs on the NHS. However due to the problems that
coincide with the tax which are outlined above, people will start to wonder whether the tax
is not the most sensible option and instead we could simply charge people for treatment of
obesity related illnesses. This means that it is only affecting the unhealthy eaters.…read more

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