The effectiveness of fat taxes and thin subsidies in improving diets

Lead Research Organisation: University of Reading
Department Name: Sch of Agriculture Policy and Dev

Abstract

Policy makers have become increasingly concerned about the obesity ‘epidemic’ and other aspects of diet, such as consumption of too little fruit and vegetables and too much saturated fat. Together these impose substantial costs on the National Health Service as well as lost productivity to the economy through days of work lost and early retirement due to ill-health. 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. They propose a ‘system-wide’ set of policy interventions to tackle the problem and recognise that taxes on unhealthy foods and nutrients or subsidies on healthy foods or nutrients could be a part of the system. Taxes on unhealthy foods have in the past been dismissed as having an unfair burden on poorer segments of society and for being ineffective. Recent research in Denmark suggests however that it may be possible to combine 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. Models will be developed to assess the impact of different combinations of taxes and subsidies on nutrient demand in England by socio-economic group, Government Office Region and income. The burden of the tax/subsidy combinations on different socio-economic groups will also be calculated. The objective will be to find whether certain combinations of tax and subsidy are particularly effective, especially to those social groups whose health outlooks are poorest, and whether these can be achieved without placing a financial burden on the poorer groups.

Technical Summary

Foresight (charged by Government to create challenging visions of the future to ensure effective strategies now) has called for a system-wide approach to tackling obesity and other nutrition-related ill-health; fiscal interventions could be an important element of the system. Past proposals for taxes on unhealthy foods have been dismissed as regressive and ineffective, but there is potential for tax/subsidy combinations that overcome this problems. Models will be developed to simulate the impact of different combinations of taxes and subsidies on foods and nutrients, on nutrient demand and the fiscal burden, by socio-economic group, age, Government Office Region and income. Demand modelling, will use the Quadratic Almost Ideal Demand System (QAIDS) and, in order to examine the distributional impacts of taxes and subsidies, it will follow an approach which enables the parameters of the model to vary according to demographic characteristics of the households. The model will be estimated using data from the Expenditure and Food Survey (EFS). Prices will be derived from unit values by assuming all households surveyed in the same week in the same Government Office Region (GOR) face the same prices. The impacts of a given tax or subsidy on food choice and expenditure will be computed and the impacts of the policy on nutrient and calorie intake will be obtained by converting changes in food demand to changes in nutrient and calorie demand using a matrix of food composition coefficients. The distribution of these effects will be examined across, income levels, regions, ages and social class.
 
Description ESRC responsive mode
Amount £519,430 (GBP)
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 09/2013 
End 09/2016
 
Title Bayesian AIDS estimator 
Description One of the key achievements is technical: the research develops a theoretically valid approach to the estimation of demand interactions that will enable an assessment of the effects of interventions on the complete diet rather than specific foods. Another key achievement is scientific: this would be the first work of this type to be conducted in the UK (only one similar previous study conducted in Denmark) and the findings will be novel for the UK and globally the most comprehensive analysis of relevant fiscal instruments to affect food consumption. 
Type Of Material Data analysis technique 
Provided To Others? No  
Impact The new estimation method developed allow us to simulate the effects of changes in food prices which result from the imposition of fat taxes and thin subsidies on the distributions of food consumption and welfare in England 
 
Description Partnership with Researchers at the University of Oxford 
Organisation University of Oxford
Department Nuffield Department of Population Health
Country United Kingdom 
Sector Academic/University 
PI Contribution Richard Tiffin will further develop our model of the impacts of fiscal instruments on dietary choice.
Collaborator Contribution They are leading the application
Impact We have contributed to a grant submitted for funding by the NIHR
Start Year 2011
 
Description Filmed sugar tax piece for ITV television 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Filmed a short piece on sugar tax for ITV television.
Year(s) Of Engagement Activity 2016
 
Description Group discussion meeting with Jamie Oliver 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Media (as a channel to the public)
Results and Impact Attended a group meeting led by Jamie Oliver who was working on a documentary about sugar and its role in the global obesity epidemic. Invited to share thoughts on how a sugar tax or sugar drinks tax could help in the fight against obesity and diet-related disease in the UK.
Year(s) Of Engagement Activity 2015
 
Description HealthWatch Debate 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Debate motion: This house believes sugar is harmful so ALL sugary foods should be taxed, not just soft drinks.
Spoke on the evidence against the motion.
Year(s) Of Engagement Activity 2016
 
Description IFPRI conference 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Type Of Presentation Keynote/Invited Speaker
Geographic Reach International
Primary Audience Other academic audiences (collaborators, peers etc.)
Results and Impact Talk given by Richard Tiffin on "Using Fat Taxes and Thin Subsidies to Improve Diet and Health" to IFPRI Organised conference "Leveraging Agriculture for Improving Nutrition and Health" held in Delhi, India 10-12th February 2011. http://2020conference.ifpri.info/program/

The conference was influantial in reasing this important issue in an international arena. A video of the talk is available at http://www.youtube.com/watch?v=g7QNKiypiD8
Year(s) Of Engagement Activity 2011
 
Description Irish Nutrition and Health Foundation Meeting 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Type Of Presentation Keynote/Invited Speaker
Geographic Reach International
Primary Audience Health professionals
Results and Impact Talk given by Richard Tiffin to conference "Obesity - where do we stand and where do we go from here?"
http://www.nutritionandhealth.ie/Sectors/NHF/nhf.nsf/vPages/Media_and_Publications~Previous_Events~2012-obesity---where-do-we-stand-and-where-do-we-go-from-here?OpenDocument

Talk was covered in the Irish Times
http://www.irishtimes.com/newspaper/ireland/2012/0920/1224324200702.html
and in evidence to the Irish parliament
http://www.irishtimes.com/newspaper/ireland/2012/1012/1224325188195.html
Year(s) Of Engagement Activity 2012
 
Description Media Interest 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact The work on soft drink and fat taxes continues to attract media interest. The BMJ paper in particular resulted in over 100 media enquiries.

The policy debate around the efficacy of these instruments contiues.
Year(s) Of Engagement Activity 2013,2014
 
Description Panel member at The Sugar Reduction Summit 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Invited panel member at Sugar Reduction Summit held at the Royal Society of Medicine. Debate title: What does success look like and how might we achieve it? This covered: the Government's appetite for a sugar tax; promotion of sweeteners as alternative to sugar and Public Health's role in this.
Year(s) Of Engagement Activity 2015
 
Description Talk at British Library 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? Yes
Geographic Reach Regional
Primary Audience Public/other audiences
Results and Impact Talk stimulated a lively audience discussion.

A number of participants indicated that their views have changed.
Year(s) Of Engagement Activity 2014
URL https://www.youtube.com/watch?v=KgYIiMM5Z_w&feature=youtu.be
 
Description Talk at British Nutrition Foundation Event 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? Yes
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Talk stimulated discussion and was reported in the BMJ.

A number of contacts were made and continue to e active.
Year(s) Of Engagement Activity 2014
URL http://www.nutrition.org.uk/bnfevents/pastevents/foodtaxes
 
Description Talk to National Heart Forum 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? Yes
Type Of Presentation Keynote/Invited Speaker
Geographic Reach National
Primary Audience Health professionals
Results and Impact Talk by Richard Tiffin to National Heart Forum seminar "Physical Activity and Cardiovascular Prevention in Europe: What is the role of food taxes?". Around 60 delegates attended the event. It was held in London on 29th June 2012

A lively discussion ensued
Year(s) Of Engagement Activity 2012