Will a Donut Tax Get People to Eat Kale?

Boris Johnson asked a big question, got a complex answer and now the U.K.’s prime minister is faced with a tough choice.

When, in 2019, Britain’s government commissioned prominent restaurateur and entrepreneur Henry Dimbleby to undertake a major examination of the country’s food systems — from farm to fork, as he put it — the issue was certainly important. Britain was leaving the European Union and needed to think about the future sustainability of its agriculture sector, trade deals, environmental degradation and the way the country’s vast food-and-drink industry is regulated.

But a key part of that picture was also urgent: The U.K. is the third most obese country in the G20 after the U.S. and Mexico, with one in three adults in the U.K. over 45 categorized as clinically obese. The government spends around 18 billion pounds (almost $25 billion) annually, 8% of all healthcare expenditure, on conditions related to a high body mass index (BMI). A study that also looked at how the food system could be made healthier for consumers made a lot of sense.

The Covid pandemic amplified that urgency in ways that were unimaginable when the report was commissioned. An obese person is 1.5 times more likely to die from Covid-19 (death is 2.25 times more likely for those who are severely obese). The issue is also personal to Johnson, who attributed his own near-death experience with Covid-19 partly to obesity. He has reversed his earlier cavalier views toward junk food and made fighting obesity a key pledge.

Many of the recommendations in the nearly 300-page report published Thursday (actually Part Two of the project) also go straight to the heart of Johnson’s central mission to level up the economy — the subject of a speech he gave on the same day. If health is the ultimate wealth, it’s becoming increasingly clear that the hand of government will be needed to break what the National Food Strategy team calls the “junk food cycle.” But following the new plan — including the report’s recommendation for a new Sugar and Salt Reformulation Tax — will also sit uncomfortably with the part of the Conservative Party that has long resisted such economic interventions. Johnson will have to bring his party with him if he wants real change.

The data is there to support him. Health inequality has widened during the pandemic and will get worse without the right policies in place. Children from the poorest quintile of families eat 29% fewer fruit and vegetables, 75% less oily fish and 17% less fibre a day than children in the top quintile.

Those differences show up starkly in health outcomes. The poorest are twice as likely to be overweight or obese by the age of 11, twice as likely to die from preventable heart disease, 1.7 times more likely to die from preventable cancers.

One reason that 80% of the processed food sold in the U.K. is unhealthy is that junk is cheap. Food that is high in sugar, fat, refined carbs and salt is on average three times cheaper per calorie than healthier fare, according to the report. And it isn’t just the extra heaps of sugar. Studies show that ultra-processed foods are highly habit-forming.

The new report makes no apologies for the fact that the strategy is interventionist. No Conservative government wants to settle on a new tax as a solution to any problem, but the question is whether taxation is the least bad option, whether it achieves the ultimate objective and whether the costs to the taxpayer are acceptable. The response from the food and drink industry is usually that poverty reduction and education is the best answer since their highly engineered or sugary products are not deadly when consumed in moderation. That, of course, is both self-serving and misleading; a boiling frog doesn’t realize it’s in hot water.

Of course governments have been using “corrective” taxes for years, whether on gasoline or a pack of cigarettes or, more recently, on sugary drinks. They are justified where the market price of the goods fails to reflect the real costs associated with consuming them.

Opponents argue that people aren’t going to exchange their daily Cadburys for a helping of kale, whatever the tax. But most manufacturers can reformulate their products to be healthier if given the incentive (there may be no hope, however, for a box of Kellogg’s Frosties, Dimbleby told the BBC). They will not make the changes required if competitors are free to sell the more addictive high-sugar or salt equivalents.

The other point to bear in mind is that taste buds adapt. If you’ve ever given up added sugar for a while, you won’t be surprised at how the taste of, say, a carrot or a red bell pepper on the palate can be bursting with sweetness. Most people didn’t notice the reduction in sugar in drinks after a 2018 sugar tax introduced in the U.K. nudged drinks companies into changing the recipe to keep sugar content below the tax threshold.

With the help of modeling from the Institute for Fiscal Studies, the report estimates that the new tax — a proposed 3 pounds per kilogram on sugar and 6 pounds per kilogram on salt — would raise 2.9 billion to 3.4 billion pounds per year, which would be used to fund a range of measures to help support deprived communities. Dimbleby estimates that the long-term economic benefit would be around 126 billion pounds, though it’s hard to put a price on health. For comparison, the OECD estimates that the cost in workforce productivity and reduction in life expectancy because of problems associated with poor diet is 74 billion pounds a year.

How those tax revenues are spent must be part of the answer, too. Expanding programs that provide meals for low-income children, as well as holiday activities and culinary skills for their families – massively lacking in our fast-food, ready-meal societies — must be an important part of any solution. A study published in the British Medical Journal that examined social spending in OECD countries between 2000 and 2015 found that social spending on children was inversely associated with the prevalence of childhood obesity.

Opponents argue that so-called sin taxes are regressive and the calories saved will make little difference. But clearly the old recipe of education, exercise and willpower aren't working. And Dimbleby is adamant that even a modest calorie reduction adds up over time to something significant, and that the resulting change in habits will be self-reinforcing and are the only way to break the junk food cycle.

Much depends on getting the balance of any new intervention right (and the report has various other recommendations on that). But given Tory opposition to new taxes, the new food strategy is a battle that would require the support of the government’s heavyweight if it is to succeed. Early signs are that Johnson may not be inclined to try. Asked about the report at a press conference Thursday, he seemed to distance himself, saying he was not “attracted to the idea of extra taxes on hard-working people.” His aversion to raising any tax is understandable, but the plate he pushes away may contain just the nutrients his country needs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Therese Raphael is a columnist for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.