With nutrient taxes recently attracting media attention in a number of countries, Ben Cooper reflects on how the food and beverage industry might react to the heightened debate.
In case you missed it, this week saw a very interesting plebiscite in the US. There is a fairly clear reason why the referenda in the cities of Richmond and El Monte, California struggled to attract much news coverage but had they not taken place at the same time as Presidential and Senate elections they may well have done.
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The subject under electoral scrutiny was of genuine public interest and of direct relevance to food and drink companies.
Voters in Richmond and El Monte went to the polls to decide on – and reject – the imposition of a tax on sweetened soft drinks. In Richmond only 33% of voters supported the measure while in El Monte it gained just 23% voter support.
Opponents of nutrient taxes will use the result to support their contention that popular support for such measures is low and that the public by and large agrees with their view that these taxes will be ineffective in reducing diet-related illness. On the first count there would appear to be little argument but on the second voters seldom enthusiastically support new taxes and the fact that it was rejected does not necessarily make the premise invalid.
Moreover, the soft drinks industry reportedly spent US$1.3m lobbying against the measure in El Monte and $2.5m campaigning against it in Richmond. The American Beverage Association (ABA) may well have to reach into those deep pockets on a fairly regular basis over the next few years. State and city authorities are increasingly eyeing this form of taxation, whether just to swell depleted coffers or as a proactive public health measure. A dozen states already have such measures in place, albeit at low percentages.
In July, more than 100 US health and consumer groups launched a campaign for a Surgeon-General’s report into soft drinks, and the re-election of President Obama makes it more likely that this could happen. Like a report this year by the Institute of Medicine (IOM), such a report would certainly consider – and could feasibly recommend – fiscal measures.
Furthermore, nutrient taxes are being discussed – and in some instances imposed – in a host of other countries, such as the UK, Ireland, South Africa, Australia, New Zealand, Israel and Canada.
Three countries – Denmark, France and Hungary – have actually enacted legislation over the last year, though the Danish experiment looks set to come to an end prematurely as the result of a change in government. Nevertheless, the food and drinks sectors will have to become accustomed to the subject being discussed and researchers suggest that that the more it is discussed over time the more accepting the public will become, as was the case with both alcohol and tobacco advertising, even if the products themselves are not directly comparable.
There are two other pressures militating towards increased discussion of nutrient taxes. They are an easy form of revenue generation at a time when budgets are tight. Meanwhile, the policy of taxing unhealthy foods is embraced by the World Health Organization (WHO) as part of its global strategy to tackle non-communicable diseases (NCDs).
So faced with an increasingly live debate over the issue, how should the food and drinks sector respond? One answer, as shown this week, appears to be to focus on lobbying, and across a variety of issues this has been extremely effective. Indeed, last year a move for a soda tax in the California state legislature was defeated at the committee stage after industry lobbying. Industry will continue to wage the battle for hearts and minds with dollars and euros and that will bear some fruit.
The industry’s principal arguments are also not without merit. It posits rightly that such taxes are regressive. They affect poorer families, which spend a higher proportion of their income on food, more than wealthier ones. They also victimise vast swathes of the public who consume more indulgent foods in appropriate moderation with no discernible adverse health effects. On that level, they do not appear all that fair. Industry also argues that they are an ineffective health measure.
Fortunately for industry advocates the evidence for food taxes having positive health impacts is relatively weak, particularly in addressing chronic obesity, relying primarily on economic modelling research. Even the most avid proponents of nutrient taxes say they would have to be enacted as part of a raft of measures to be effective.
A paper published in the British Medical Journal (BMJ) in May by a team of researchers led by Dr Oliver Mytton of Oxford University suggested they would be most effective if combined with subsidies on healthier foods such as fruit and vegetables.
Linking fiscal measures together like this – particularly in the form of hypothecation where funds raised are earmarked for specific uses – is unpopular with governments and deemed to be inflexible and impracticable by economists.
That said, this is an aspect to the debate the industry representatives could make more of. To begin with – and it is already doing this to a degree – industry can stress what companies are already doing to make food healthier through reformulation and to broaden the availability of healthier food choices. But they can go further.
Modelling research by health economist Professor Richard Tiffin – who on balance takes a sceptical view of the efficacy of nutrient taxes in tackling obesity – found that microeconomic measures to promote the consumption of fruits and vegetables would be more successful than those aimed at reducing consumption of unhealthy foods. The IOM report in May placed equal emphasis on making healthier foods cheaper as it did on making unhealthier ones more expensive. The industry should seize on this.
Rather than just dismissing the notion of linking any nutrient tax to the promotion or even subsidy of healthier foods as too administratively complex, as industry representatives have done, they should suggest the focus should initially be on the promotion – and even subsidy – of healthier foods.
The industry response to the California referenda was a deafening “no”, while the Mytton paper in May was derided as “ludicrous”, all rather negative from a stakeholder group keen to participate in the collective search for constructive solutions. Suggesting that the emphasis might instead be placed on fiscal measures to promote the consumption of better-for-you foods would surely be a more positive and constructive message, and speaks to a course of action that might also carry greater overall health benefits.
