New research project probes fast food tax strategy

Will it help reduce obesity rates in the country?

The Australian National Preventative Health Agency (ANPHA) would be funding a research study to investigate the proposed fat tax or fast food tax, as a means of addressing the country’s overweight and obesity problem.

The project will be conducted in a period of three years, headed by Griffith University’s Dr. Tracy Comans.

Below is a Q&A with Dr. Comans, research project leader.

QSR Media: What initiated the ANPHA to come up with the fast food taxation strategy?

Tracy: Our research team based at Griffith University came up with this question. As a health economist, the future health care cost of obesity is of great concern. The direct costs of obesity in Australia have already been estimated at over $20 billion. Without intervention the rates are projected to double in the next 20 years. Taxation is frequently mentioned as a strategy and our plan was developed to look at this aspect of prevention of obesity. ANPHA is the funder and did not contribute to developing the research question. I cannot speak for ANPHA.

QSR Media: Tell us more about what the taxation will entail and mean for consumers and the F&B industry.

Tracy: We are only in the preliminary stages of our research. Whether taxation is an acceptable strategy has not been determined.

QSR Media: What will be the study’s scope and limitations?

Tracy: We are looking at pricing strategies that will encourage parents of young children to choose healthier options for their families so that obesity does not take hold. We know that food preferences are set early - often before age three. In under fives, there is no room for sugar sweetened drinks, highly processed snack foods, processed meats and take away foods. These should not be consumed at all by this age group.

QSR Media: What can you say about the study’s cost-effectiveness?

Tracy: The food industry spends over $400 million a year marketing. Obesity costs us over $20 billion a year. In the context of this, we spend a tiny amount on research and preventive health. This study will provide valuable information on what regulatory tools are acceptable to the general public and how much influence price has on purchasing decisions.

QSR Media: How big of an impact can this make in addressing the country’s obesity problem?

Tracy: Regulation has caused smoking rates in Australia to decline from a high of over 70% of men smoking to just over 16%. Of course this encompassed advertising restrictions and accessibility as well however most research indicates that price was the biggest factor in reducing smoking rates. Our overweight and obesity rate is currently 66%. Regulation would have an impact but how much is not known.

QSR Media: Denmark introduced a similar policy on fat tax last October 2011, but eventually cancelled this last year. How will the Australian policy be different from the Danish?

Tracy: What do you mean by a similar policy? To whom? There are no other similar taxes and it seemed to be poorly thought out and introduced. The Danish policy was only one of many policies currently in force around the world. No others specifically target a percentage of fat like the Danish one did.

In the rest of Europe, health-related food taxes have been introduced in Norway, Finland, Hungary, and France. In 1981, Norway introduced a tax on sugar, chocolate, and sugar-sweetened drinks. In 2011, Finland introduced a tax on soft drinks of about 10c per litre, and on confectionary at about 95c per kilogram.

In 2011, Hungary introduced a tax of about 5c per item on sugary drinks and foods high in sugar, fat, or salt. And in 2012, France introduced a tax of about 9c per litre on drinks containing added sugar or sweetener that has led to a small increase in purchase price and a subsequent small reduction in sales.

A number of South Pacific countries have health-related food taxes. In 1984, Samoa introduced a tax of around 18c per litre on soft drinks.

In 2002, French Polynesia introduced a tax of around 66c per litre on imported sweetened drinks, confectionary, and ice cream. In 2006, Fiji introduced a 5% tax on imported soft drinks. In 2007, Nauru introduced a 30% import levy on sugar, confectionary, carbonated drinks, cordial, and flavoured milks.

So some of these have been running for a long time and quite successfully. It is incorrect to say the Danish "experiment" means that food tax won't work but it seems like the food industry wants to promote this inaccurate view.

An Australian policy would have to be combined with adequate labelling, be explicit that it is for health reasons and the public would need information on where the revenue raised would go - preferable into activities promoting a health diet.

QSR Media: How do you think the industry and consumers will react to the proposed taxation strategy?

Tracy: We have involved consumers in our research so we know what will be acceptable to consumers. This is a very important part of our research. These results will be available in a few months. I did invite both the Australian Food and Grocery Council and the Australian Beverages Council to participate in our research either in person or by providing a position statement however both organisations declined.