JunkFood/Fat tax

TokenWhite

Hey, I'm currently doing an assignment on drafting a fantasy budget, one of our groups proposals was to introduce a fat/sugar/calorie tax or a combo tax. I've most of the research done in terms of the prevalence of obesity, impact, social and economic costs etc. But I'm having a lot of trouble finding out how we might implement it i.e. would it be better to base the tax on calorie content as a % of the RDA, or to just simplify it and tax the products of a particular category, for example confectionery, ice cream, sweets, chocolate etc etc.

I know basing it on nutritional value might be of more use in terms of its impact on health but if you rigidly define what is and what isn't considered healthy, don't you leave yourself open to producers manipulating nutritional labels, for example rather than the label reading "25% RDA of calories per 100g" it might be changed to read "13% RDA of calories per burger/sausage/serving" etc. This might then mean that they don't meet the threshold and thus the product avoids the tax? Any ways around this? I have an informal Q and A tomorrow and I've no doubt this will pop up so any insight is much appreciated.

siochain

TokenWhite wrote: »

or to just simplify it and tax the products of a particular category, for example confectionery, ice cream, sweets, chocolate etc etc.

if they insist on doing it thats its.

Tread here already with some thoughts on it.

Mellor

Tax foods on a calorie basis (% of RDA or otherwise) is a bit silly. Oils and fats are going to be high per 100g. Yet they aren't eaten in the same quantities as other foods.
From a calorie point if view sugar is the same as protein.

I'm not sure how a junk food could be clearly defined either.

MacBoogerBalls

They should put a levy on food advertising.
I assume the majority is spent on advertising junk.

cloud_dancer

I would go with tax per category. It's not so easy for companies to avoid.

TokenWhite

Mellor wrote: »

Tax foods on a calorie basis (% of RDA or otherwise) is a bit silly. Oils and fats are going to be high per 100g. Yet they aren't eaten in the same quantities as other foods.
From a calorie point if view sugar is the same as protein.

I'm not sure how a junk food could be clearly defined either.

I was thinking more along the lines of pre-packed processed foods like packet pizza/lasagne/hamburgers etc" Although I can see there might be difficulty there too.

rubadub

Mellor wrote: »

I'm not sure how a junk food could be clearly defined either.

This is the biggest problem, I have never seen a decent attempt and would be interested in anything people have. I like spotting loopholes and no doubt the manufacturers have teams doing just that.

Mellor wrote: »

Tax foods on a calorie basis (% of RDA or otherwise) is a bit silly. Oils and fats are going to be high per 100g.

And conversely you have breakfast cereals which could be very high in RDA. What many breakfast cereal makers do is the equivalent of mars releasing a new twix with a mulitvitamin crushed up in the mix, and bragging about how your kid will get enough vitamins & iron as long as he is good and eats his twix.

TokenWhite wrote: »

I was thinking more along the lines of pre-packed processed foods like packet pizza/lasagne/hamburgers etc" Although I can see there might be difficulty there too.

You need strict definitions. Some things are legally defined for tax purposes, like a 'non chocolate biscuit' in Ireland.

http://www.revenue.ie/en/tax/vat/rates/decision-detail-00081.jsp

Remarks:

(1) It should be noted that biscuits wholly or partly covered or decorated with chocolate or some other product similar in taste and appearance are liable at the Standard rate. (2) However, the Zero rate applies to certain baby biscuits (liga etc.) (3) Value of moisture content for a biscuit is up to 12% per State Chemist. Over that value products are considered cakes.

A smart maker would just rebrand hobnobs with say a baby on the front and tell shops to stock them there to avail of zero vat. This was an issue in threads before, when sports supplements got VAT on them. Glucose in the baby section or baking section is zero vat, stick a picture of an athlete on it and it could be 23%. Same with whey protein powder.

Manufacturers can quote small portion sizes, or put "family size" on an item they know 1 person usually eats. Most frozen pizzas that I would consider single size quote half or quarter pizza values as being the typical portion.

teacosy

The Nutrient Profiling Model is used in the UK to define foods from an advertising perspective etc

http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_123494

It's also what's proposed by the BCI here re advertising of food to children.

TokenWhite

Appreciate the replies, I've veered towards the idea of categorisation rather than nutritional values, seems the best if two bad options. Clearly it has issues attached in that many less unhealthy options may also be punished, but then again too rigidly defining anything gives producers the option of slightly modifying the product to fall outside the scope. Best bet seems to be to target categories traditionally high in sugar/calories such as chocolate, soft drinks, ice creams etc., and work with that as a baseline.

Another issue (Last one I promise) that's popping up is the payment i.e. how exactly will the revenue get the money. Initially my idea was to just add a VAT surcharge to any food that comes into scope, meaning that the current VAT system will pretty much deal with it, but my lecturer seems to be of the opinion that introducing more VAT rates will just overcomplicate the system. Would a levy be viable? Would it be expecting too much of retailers to ensure that the correct goods are marked up to include the levy price? or would it be an administrative nightmare?

teacosy

There was a conference in UCD on this during the summer - just before the DoH&C consultation day. The presentations are here:
http://www.ucd.ie/foodandhealth/seminarseries/fatsugartaxes/
Interesting to hear what the economists say.

rubadub

TokenWhite wrote: »

Would a levy be viable? Would it be expecting too much of retailers to ensure that the correct goods are marked up to include the levy price?

I would think a levy would be more complicated than another tax bracket. Are you suggesting a 1 off levy, like the plastic bag tag, which is unrelated to the price paid? or a percentage applied? As it would bring up the problem of portions again.

On the subject of defining junk food, it came up when they wanted calories displayed in restaurants. At the time many media outlets were reporting it was to be only "fast food restaurants", and I was wondering how they could define them, when many nice looking cafes or restaurants could be serving stuff many would regard as unhealthier than the likes of Burger King.

One rule was

A ‘standard’ food or drink item is a product that:
1) Is on sale for at least 30 days a year; and
2) Remains the same each time it is made. In this way,
calorie information calculated on these food and drink
items remains accurate

Which covers the likes of McDonalds. Though the "burger of the week" would be exempt.

more info here, there is a technical guidance link at the bottom http://www.fsai.ie/news_centre/press_releases/calories_on_menus_report/04072012.html

TokenWhite

rubadub wrote: »

I would think a levy would be more complicated than another tax bracket. Are you suggesting a 1 off levy, like the plastic bag tag, which is unrelated to the price paid? or a percentage applied? As it would bring up the problem of portions again.[/url]

I was thinking more along the lines of a "mark up on cost" levy that would be applied on top of the VAT, so VAT at 23% plus levy of 15% = Cost + 38% of cost. Other than that though I was thinking it would be much the same as the plastic bag levy i.e. retailer withheld the levy and filed it's liability with RoS, which would then deduct the amount from the relevant bank accounts.

Personally I would have thought creating a new VAT bracket or creating a surcharge VAT that would effectively be implemented into the current VAT systems would have been easier, but the lecturer seemed fairly adamant that that might not be the best approach, and he also specifically mentioned using a levy approach.

I know one of the nordic countries (Finland I think) applies a tax on certain categories of food on a levy basis, but I can't find anything on how exactly they implement it.

rubadub wrote: »

On the subject of defining junk food, it came up when they wanted calories displayed in restaurants. At the time many media outlets were reporting it was to be only "fast food restaurants", and I was wondering how they could define them, when many nice looking cafes or restaurants could be serving stuff many would regard as unhealthier than the likes of Burger King.

One rule was

Which covers the likes of McDonalds. Though the "burger of the week" would be exempt.

more info here, there is a technical guidance link at the bottom http://www.fsai.ie/news_centre/press_releases/calories_on_menus_report/04072012.html

Yeah I can see how that might cause problems, and it's something I've given a lot of thought to but I don't think I have to worry too much about what products exactly will fall into scope, it's more about understanding how the government budget system works and being able to see what issues might arise. With only 2500 word limit covering four policies, I'd never be able to fairly define in a way that I'd be happy with.