Elsevier

Health Policy

Volume 121, Issue 8, August 2017, Pages 887-894
Health Policy

Review
The taxation of unhealthy energy-dense foods (EDFs) and sugar-sweetened beverages (SSBs): An overview of patterns observed in the policy content and policy context of 13 case studies

https://doi.org/10.1016/j.healthpol.2017.06.011Get rights and content

Highlights

  • A remarkable amount of conservative/liberal governments adopted the taxes.

  • Fiscal need is a main driver of the policies.

  • Taxing SSBs is more common than taxing EDFs.

  • SSB taxes can be administered more easily compared to EDFs.

  • The SSB tax levy of recent cases is relatively high.

Abstract

Taxation of energy-dense foods (EDFs) and sugar-sweetened beverages (SSBs) is increasingly of interest as a novel public health and fiscal policy instrument. However academic interest in policy determinants has remained limited. We address this paucity by comparing the policy content and policy context of EDF/SSB taxes witnessed in 13 case studies, of which we assume the tax is sufficiently high to induce behavioural change.

The observational and non-randomized studies published on our case studies seem to indicate that the EDF/SSB taxes under investigation generally had the desired effects on prices and consumption of targeted products. The revenue collection of EDF/SSB taxes is minimal yet significant. Administrative practicalities in tax levying are important, possibly explaining why a drift towards solely taxing SSBs can be noted, as these can be demarcated more easily, with levies seemingly increasing in more recent case studies.

Despite the growing body of evidence suggesting that EDF/SSB taxes have the potential to improve health, fiscal needs more often seem to lay their policy foundation rather than public health advocacy. A remarkable amount of conservative/liberal governments have adopted these taxes, although in many cases revenues are earmarked for benefits compensating regressive income effects. Governments voice diverse policy rationales, ranging from explicitly describing the tax as a public health instrument, to solely explicating revenue raising

Introduction

Over the past few years there has been significant growth in political, public and academic interest in the taxation of energy-dense foods (EDF) and sugar-sweetened beverages (SSB). A growing body of evidence suggests that such fiscal measures have the potential to improve population health [1], [2], [3], [4]. Taxation has already been proven effective convincingly for tobacco and alcohol [5]. The additional revenues of these taxes may further increase their attractiveness for policymakers. Not only can this be useful in times of budgetary deficiencies, it can also broaden the financing model of health systems. Currently most countries are highly reliant on income taxes, which is a barrier for employability because increasing the marginal tax rate means increasing personnel costs. The reuse of taxes on unhealthy commodities in the fiscal domain of health can contribute to decreasing income tax dependency [6].

More important is that a tax on EDFs and SSBs can correct for the negative externalities associated to excess consumption of these products, by increasing their prices to their true social costs. It is probable that a case for such a Pigovian tax can be made given the relatively low prices of most EDFs and SSBs and their impact on health and associated medical costs, but it should be noted that quantification of all externalities is still in its infancy. The case for SSBs may be stronger since their inflation-adjusted price has gone down over the past decades whereas prices of fruits and vegetables have gone up [7], [8].

Profound policy barriers exist for the uptake of EDF and SSB taxation. Apart from the fact that consumption taxation is regressive [5], which can cause political debate on its own, food taxes also lend themselves to considerable ethical scrutiny, as they touch the base of the debate where protection of the public becomes restriction of personal freedom [9]. Public support for EDF/SSB taxes therefore depends on the normative discussion whether a government should only use arguments of health promotion (promoting healthy behaviour) or also of health protection (protecting the population against health dangers) to legitimize the prevention of obesity and diseases related to excess consumption of EDFs/SSBs. In addition, normative preferences also influence whether people find the nature of the intervention appropriate. Since EDF/SSB taxes are a form of collective prevention, they may be found inappropriate as they also affect people who are not at risk for developing obesity or related diseases. Furthermore, these taxes interfere with the interests of the food and soda industry, who exert strong lobby efforts for policies in favour of their interests and are accused to ‘puzzle’ lay people’s nutritional literacy [10]. The food industry contributes to framing obesity as merely a matter of personal responsibility in addition to portraying a lack of physical activity as the primary cause; hence framing strategies that aim to decrease public acceptance for policy measures such as EDF/SSB taxes by stating they infringe on personal freedom and choice [10], [11]. Another complication concerns the difficulty to robustly identify the health effects of EDF/SSB taxes. There exist many confounding factors such as substitution to other foods, and external reasons for price fluctuation and dietary behaviour.

Furthermore, health effects may only be visible after several years or even decades. Available evidence comes mainly from modelling studies which do take substitution effects into account, or observational studies of separate episodes of the causal chain linking an EDF/SSB tax to health outcomes [12]. Put simple, a case for such taxes can be made as the available evidence does point to effectiveness, but this evidence is less clear-cut as compared to tobacco and alcohol where addiction components are publicly accepted. A final complexity is that demand for most foods is not very elastic, which means that industry and retailers can shift relatively large parts of price increases onto consumers without enduring large consumption decreases. A meta-analyses conducted by Green, Cornelsen [13] for instance ranges the elasticity of foods in high-income countries from −0,36 to −0,61, with low- and middle income countries having higher price elasticity. Consumers seem more responsive to SSBs, with price elasticity estimates of soft drinks in the USA for instance ranging between −0,79 [14] and −0,86 [15]. Because of relatively inelastic demand experts argue that price increases should be tangible in order to generate meaningful behavioural effects. A sales tax of 20% or an excise of 1 cent per ounce for SSBs are mentioned [16]. However, in the world of policy, compromises must be made. Such high levies and price increases may prove unrealistic in many policy settings, as policymaking not only develops on the basis of puzzling (that is using evidence-based strategies) but also on powering (that is influencing people, in particular to control resources) [17].

Taxation of unhealthy EDFs and SSBs has potential both as a public health tool but also in the light of health systems’ financial sustainability. Yet profound barriers disable its uptake. In the academic literature, attention has mostly been focussed on whether EDF/SSB taxes work, with little or no attention being paid to the policy determinants. We address this paucity of research by providing an overview of patterns observed in the policy content and policy context of 13 case studies. To our knowledge, this is the first study that investigates the policy comparatively from such a wide perspective.

Section snippets

Methods

In order to present an overview of patterns observed in the policy content and policy context of EDF/SSB taxes on the basis of systematically collected data, we first identified case studies of which we assume the tax has potential to meaningfully impact dietary behaviour using a purposeful sampling strategy. We therefore only included cases where the level of taxation is relatively high. We then identified a number of possible policy determinants on the basis of the policy analysis models of

Results

The complete results are presented in appendices 1 and 2 in supplementary material. We here point out common patterns observed in the policy content and policy context of EDF/SSB taxes by describing the differences and similarities witnessed in the 13 case studies.

Discussion

Our analysis of 13 case studies on EDF/SSB tax policy content and context determinants has some limitations. First, it requires a systematic literature review to evaluate the effectiveness of EDF/SSB taxes in general. This was out of scope for our explorative study design that primarily focuses on identifying policy patterns in 13 case studies. The impact elements of our policy content analysis therefore are limited with respect to external validity. The number of observational and

Conclusions

This study is in our knowledge the first attempt to investigate patterns in the policy content and policy context of taxing unhealthy foods and beverages, using a cross-country comparative methodology with a wide scope of included variables. We recommend scholars to enhance this methodology by adding the comparison of policy process and stakeholder behaviour.

Our study shows how this new policy instrument follows diverse policy rationales. This implies that it can be embraced by diverse

Conflict of interest

All authors declare that they have no conflict of interest.

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Acknowledgements

We thank the case-specific experts who validated our information for individual cases. This not only served as a useful fact-check but also enhanced our understanding of the policy dynamics of individual cases.

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