The debate currently being played out in Ireland places the theoretical ideas about how fat taxes may or may not work, and the intended or unintended consequences which may result, in a very real context.

The suggestion that taxes on unhealthy foods could be tax grabs in disguise implemented by cash-strapped governments could certainly be applied to Ireland where the government unquestionably has alarming economic issues to address. However, Ireland also has worrying problems over obesity. Some 61% adults in Ireland are overweight or obese and 20% – around 327,000 – of children.

Faced with the human and financial cost of rising obesity and overweight, Health Minister James Reilly has taken a proactive view on the challenge, convening a Special Action Group on Obesity to look into policy options to address the problems. For example, restaurants are being asked to include calories on menus. 

However, Dr Reilly has also confirmed that the Special Action Group on Obesity has examined other measures including the introduction of nutrient-based taxes. Indeed, the idea of some form of nutrient-based taxation was mooted by the government as early as last December.

As it stands, no firm policy intentions have been outlined in this regard but the area considered most likely to be targeted by fiscal measures is soft drinks. The Special Action Group on Obesity has commissioned research into a soft drinks tax by the Institute of Public Health with its findings being reported to the Health Minister. Inter-departmental discussions within government are ongoing. 

A 10% tax on soft drinks would yield a tax benefit in the region of EUR50m. A tax covering saturated fat, added sugar and salt could produce additional revenues in the region of EUR188m but this is not considered a likely course of action.
If introduced, any tax would certainly be part of a raft of anti-obesity measures but taxation appears to be very much on the agenda, drawing criticism from the Irish food industry.

The most prevalent method of evaluating the efficacy of fat taxes – and therefore the likely basis for policymakers’ decisions on the issue – is modelling and, as in other countries, industry representatives in Ireland are concerned that what they see as a potentially damaging course of action might be taken on this basis.

“All the economic data out there is very theoretical,” says Shane Dempsey, head of consumer foods at Food and Drink Industry Ireland (FDII). “At this point taxes like this haven’t been proven to work. There is no proof that these taxes actually improve the obesity situation or improve health. They affect wealth more than health.” Dempsey urges the government to look at “other more pragmatic solutions” rather than a policy which could potentially “damage jobs, growth and competitiveness” in the food sector.

He says that the Danish example has proven that nutrient taxes “have bigger wealth impacts than health impacts” adding that fat taxes are “too blunt an instrument”. He adds: “We need to look at a different solution. There is a range of tools there where industry and government could work together.” 

The Irish food and drink sector has a total turnover of around EUR24bn and employs nearly 230,000 people. Coincidentally, one of the chief problems so far encountered with the Danish tax – namely cross-border shopping – would also be a factor in Ireland, Dempsey points out. When sterling hit an all-time low and cross-border shopping between Ireland and Northern Ireland became a major problem, soft drinks had been one of the largest categories affected. 

However, even without the added risk of increased cross-border shopping, Dempsey says “consumer demand in the domestic economy is absolutely diabolical at the moment and any further measure that reduced consumer spending power or confidence is something to be avoided if possible”.

Dempsey also makes the critical observation that there is a divergence of view from economists and epidemiologists on the efficacy of fat taxes. “There has been a lot of theoretical research in the economic sphere and in the health sphere and the two them do not fit together at the moment.”

One prominent economist whose work has been cited by food industry advocates is Richard Tiffin, director of the Centre for Food Security and Professor of Applied Economics at the University of Reading. 

Professor Tiffin has conducted extensive research into the possible effects of nutrient taxes in changing consumption patterns and remains sceptical about their potential for producing positive health impacts.

While acknowledging that some measures may produce life-saving changes in behaviour in a minority of people who eat fairly typical levels of nutrients of concern but may have a particular susceptibility for example to coronary heart disease, Tiffin says his research shows that fat taxes will do little to alter the behaviour or the health of those who are clinically obese or dangerously overweight. 

As it is in this cohort that the bulk of the morbidity and mortality related to diet and health is seen, and where the majority of the financial healthcare costs are also concentrated, Tiffin maintains that fat taxes are therefore an ineffective policy tool.

“As a society what we’re concerned about is not the people that consume an average diet who are particularly vulnerable to coronary heart disease,” he tells just-food. “What we are really worried about are the people who have really bad diets. And you will not affect those diets with a fat tax.”

He adds that even a tax of 20% or more, recommended by the Mytton et al. paper published in the British Medical Journal in May, would not produce the required change in the sector of the population most at risk.

However, Mytton says “if we have small shifts in the population average that can result in meaningful health changes”.

Tiffin, however, is adamant that fat taxes will not address the obesity crisis. “There is a narrative that’s beginning to emerge that fat taxes will be the best policy option for solving the obesity crisis and the position I want to make clear is that is not true. These things will not address the obesity crisis and they will potentially have an awful lot of adverse impacts which actually may make other aspects of public health manifestly worse.”

He says there is a “dangerous analogy” being made between smoking and food. While smoking is “universally bad”, he points out that “even an unhealthy food actually provides some nutrients so you cannot say that any individual food is bad in the same way you can smoking”. He suggests, for example, that a tax on saturated fat would reduce calcium intake because of its effect on sales of milk and dairy foods.

Nevertheless, Tiffin believes nutrient taxation does have “a potential role as a part of a portfolio of measures”, something on which all participants in the debate appear to agree. However, he believes there is not a sufficiently rigorous understanding of the economics behind the issue.

He suggests that in organisations such as the World Health Organization and within individual countries where nutrient taxes are being discussed, the drive towards fiscal measures is being led by public health experts rather than economists who would reach different conclusions when faced with the same data. “I don’t think there are enough economists that are contributing to this debate. The whole debate is being overly influenced by public health people and I’m afraid they don’t really understand the economics that underlies this.”

The potential use of nutrient taxes as part of an integrated obesity reduction strategy, notably including subsidies for healthier foods, is among the issues discussed in the following section of this briefing.