An Australia fat tax is being designed to fight rising obesity rates in the land down under, but will the idea go belly up?
France’s fat tax concentrated on sugary soda drinks like Coca-Cola, with the fat tax designed to raise around $150 million by adding a few pennies to every can of soda.
Back in 2011, Jane Martin, the senior adviser with pressure group Obesity Policy Coalition in Australia, claimed 60 percent of Australian adults, and 25 percent of children, were overweight or obese. At the time, Martin was looking to Denmark for inspiration for the Australia fat tax:
“We think unhealthy foods should be taxed and the funds raised used to subsidize healthy food for people on a low income. We know price plays a role in our decisions, and taxes are used in alcohol and tobacco sales to change people’s behaviors It would be interesting to see the impact the fat tax would have in Denmark.”
Ironically enough, Denmark’s fat tax went belly up last year because it was “increasing prices for consumers, increasing companies’ administrative costs and putting Danish jobs at risk. At the same time it is believed that the fat tax has, to a lesser extent, contributed to Danes travelling across the border to make purchases.” The Denmark fat tax was a complex one, in which tax rates correspond to the percentage of fat in a product. The value of the fat tax was about $3.00 for every 2.2 pounds of saturated fat.
The Australia fat tax is still being debate today. The Economics Student Society of Australia (ESSA) recently published their assessment of the fat tax. ESSA points to the difficulty in defining what is fat, appropriately taxing fatty foods to correct market pressures, and implementing the fat tax without a high administrative cost. Essentially, they consider Denmark to be a warning to other nations that fat taxes do not work.
What do you think about the Australia fat tax?