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Julian Sheather: Taxing the fat

4 Dec, 12 | by BMJ Group

To the evident frustration of the Danish Medical Association, Denmark has repealed the world’s first tax on saturated fats. The climb-down came after just over a year, the government citing strong public hostility. According to the Economist, “retailers and shoppers whooped with joy” at the announcement. Given that so much of the world is struggling with the public health effects of saturated fat consumption, a long look at the Danish experience could be helpful. Tackling the diseases of lifestyle presents an almost paradigmatically “wicked” problem. Untangling the complex interplay of economics, politics, and ethics is not for the faint-hearted. At the centre of the problem lies the state’s desire to restrict people from doing what they seem to want to do: in this case consume saturated fats to the detriment of their physical health. Some of the state’s desire—though I question how much—probably is paternalistic: healthy lives are straightforwardly preferable to unhealthy ones and the state has some interest in promoting the one over the other. Paternalism has a bad name in liberal democracies—at least in theory, practice varies widely—with liberals citing JS Mill’s ringing defence of adult liberty: that harm only to others justifies an interference with an adult’s liberty. But only some of the state’s interest here is paternalistic in that strict sense. What about the burden of obesity falling on children? What role does that state have here? And what about what the economists call externalities? What about those costs not directly born by parties to the transaction—health costs for example in a publicly-funded health system? These are the dispersed costs that a tax attempts to bring back into the pricing of the goods. There is also a steep income gradient, the burdens of poor diet falling predominantly on the less-wealthy. Such structural injustices suggest that the fruits of liberty may not be equally enjoyed.

Free market apologists also trumpet our freedoms to consume. These are not trivial interests. Efficient markets deliver genuine goods. Better for us all if competition drives up standards and drives down prices: that way we get more of what we want out of our limited pockets. But food manufacturers spend prodigiously encouraging us to consume their goods. The information environment in which we swim is by no means neutral with respect to our interests. Powerful forces of persuasion are at work. And here too crude appeals to paternalism don’t fit. Liberty can be enhanced by careful intervention.

A democratic government likely to be punished at the ballot box for unpopular taxes will think twice about introducing them. Nothing new there. But before public health champions give way to despair, the Economist cites some fairly major problems with the specifics of the Danish tax. Apparently it was poorly targeted: although aimed at crisps and burgers it also bit into the luxury end of the market, punishing products not directly linked to the obesity crisis. Unlike supermarkets, small, artisan producers who could not spread the tax across other products were hard hit. Meat was taxed by the carcass not by the cut so lean meat was punished along with the fatty. It also led to a significant increase in cross-border shopping.

Looking at it from across the North Sea, one of the frustrating things about the Danish government’s move is the speed of it. Easy to share the Danish Medical Association’s sense of a lost opportunity. One year is simply not enough to assess the possible benefits of the tax. The Economist cites a study by researchers from Copenhagen University suggesting that sales of margarine, butter, and cooking oil fell by 10-20%. But they may have been offset by that cross-border shopping. It was just to soon to tell. Whatever your political views in this area it is hard to over-estimate the importance of good hard data. These are serious problems, politically sensitive, ethically charged, and good evidence is needed. Shoppers may be less tempted to whoop if their publicly-funded health systems collapse under the weight of the health costs of obesity.

Julian Sheather is ethics manager, BMA. The views he expresses in his blog posts are entirely his own.

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