HEALTH TAX
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- The paper highlights that India holds the title of the world's largest consumer of sugar. It emphasizes that while the global average consumption per person stands at 22 kg annually, an average Indian consumes 25 kg each year, encompassing various sources such as regular sugar, free sugar from sugar-sweetened beverages, and traditional sources like jaggery.
- This intake surpasses the WHO recommended limit for free sugar intake by fivefold. Moreover, India is experiencing a concerning surge in the sales of aerated drinks by 22.5% and all soft drinks by 24.8% between 2016 and 2019, contributing to what the paper terms as a "sugar epidemic."
- Additionally, the paper notes that HFSS (High in Fat, Sugar, and Salt) food products constitute 10-30% of the average total caloric intake in rural and urban households, respectively
- Taxing HFSS (High in Fat, Sugar, and Salt) foods is a strategy employed by some governments to address public health concerns related to unhealthy eating habits.
There are several reasons behind the implementation of such taxes:
Health Concerns: HFSS foods are often linked to various health issues like obesity, diabetes, heart disease, and other chronic conditions. Taxation aims to discourage excessive consumption of these foods by making them relatively more expensive, thereby potentially reducing their intake and associated health risks.
Behavioral Change: By increasing the price of HFSS foods, policymakers hope to influence consumer behavior. Higher prices might prompt consumers to reconsider their choices and opt for healthier alternatives, ultimately leading to improved dietary habits.
Revenue Generation: Taxes on HFSS foods can generate revenue for governments, which can be directed towards health programs, initiatives to promote healthier eating habits, or even subsidizing healthier food options.
Encouraging Industry Reformulation: Food manufacturers might reformulate their products to reduce fat, sugar, or salt content to avoid higher taxation. This could lead to the production of healthier alternatives, thereby positively impacting public health
- Several countries and regions have implemented initiatives to tax HFSS (High in Fat, Sugar, and Salt) foods. Some of the notable initiatives include:
- Taxes specifically targeting sugary drinks or beverages high in added sugars. For instance, Mexico, the UK, France, and several other countries have imposed taxes on sugary drinks
- Some nations have implemented taxes aimed at products high in saturated fats. Denmark, for example, introduced a tax on foods with high saturated fat content in 2011, but it was later repealed due to various reasons
- Some regions have proposed or implemented taxes targeting a broader range of HFSS foods rather than focusing solely on one component like sugar or fat. This type of tax covers various processed foods and snacks with high levels of fat, sugar, and salt
- Some countries have adopted tiered tax systems where products are taxed based on their level of unhealthiness. This encourages manufacturers to reformulate their products to reduce the taxed components
- In some instances, the revenue generated from these taxes is allocated to health promotion programs, public health initiatives, or subsidizing healthier food options to support and encourage healthier dietary choices.
- Alongside taxation, many governments conduct public awareness campaigns to educate the population about the health risks associated with excessive consumption of HFSS foods
- Currently, sugar is taxed at 18% GST, if an additional 20-30% tax is imposed, this will take the tax to 38-48%.
- Researchers have applied the metric of ‘Price Elasticity’ to determine if there will be any reduction in demand if the prices of the product go up.
- “Sugar is a widely used product, so on studying price and demand for sugar over years from datasets available between 1984-85 to 2011-2012 of Private Final Consumption Expenditure and Consumer Price Index, we estimate that if the price of sugar is increased by 10%, demand for sugar will be reduced by 2% with all other factors driving the demand remaining constant
Tax rate is tied to the volume of sugars and manufacturers are encouraged to reformulate and reduce the amount of sugar in drinks.
Up to 70 countries have imposed a health tax on sugar, SSBs and HFSSincluding Mexico, Chile, Saudi Arabia, Argentina and South Africa. In Mexico, taxation on SSBs decreased consumption of taxed beverages (and increased purchase of bottled water) in the first year of implementation and reduced mean BMI in younger age groups
Source: The Hindu
