Controversy over ‘fat tax’

We are in the grips of an obesity epidemic here in New Zealand, with one in three adults now overweight and a further one in four obese (1). It is generally agreed that multiple strategies are needed to address the problem, but one area that has received much discussion in the media this month is that of taxing unhealthy foods.

In Australia this week there are reports of controversy over whether to tax Vegemite. Vegemite is a food high in salt, but it also provides B vitamins, which are important for health. Opposition spokesperson Peter Dutton has said that the Australian Federal Government must rule out a new tax on Vegemite, arguing that good information about food is a better answer to the obesity problem than taxing foods such as Vegemite, jam or cheese.

The debate about food tax is also highlighted in the USA publication Business Week
this week, with reports that New York Governor David Paterson wants to
tax some sweet drinks in order to fight obesity. An 18% tax on non-diet
soda and sugary juice drinks would raise US$404 million in the fiscal
year starting in April and US$539 million in the year after that. It
has been suggested that this money could potentially go towards
subsidising healthier foods such as fresh fruits and vegetables.

In terms of the general debate about whether to tax unhealthy foods, concerns have been expressed that such a tax may hit low-income families harder as they may be buying a higher proportion of the less healthy foods. It has also been argued that simply changing the pricing of foods won’t change people’s eating habits. In addition, by taxing beverages such as high-sugar fizzy drinks, thin people who happen to like these will also be penalised. Also, it is difficult to categorize some foods as good or bad – not only is vegemite high in salt and a good source of B vitamins, but also cheese can be high in fat and is a good source of calcium, protein and other important nutrients.

Arguments in favour of a tax on unhealthy foods include the fact that a tax would provide funds to help towards the prevention of obesity (for example advertising campaigns to promote dietary improvements) and would also help fund future medical costs. It might also deter consumers from purchasing unhealthy foods and might encourage food manufacturers to alter the composition of their products.

Here in New Zealand, the organisation Fight the Obesity Epidemic (FOE), a charitable trust with the aim of stopping and reversing obesity and Type 2 diabetes, has been campaigning for a tax on unhealthy foods for some years. They strongly favour price incentives to help shift consumption from unhealthy to healthy foods and believe that an economic analysis is needed to find the best way of achieving this. FOE believes it is important to not only increase tax on unhealthy foods, but to also reduce tax on, or subsidise, the purchase of healthy foods.

With obesity rates sky-rocketing in New Zealand, and given that obesity is associated with many diseases and with premature death, all aspects of addressing this problem need to be considered. Price certainly has an influence on food choice, and presenting healthier food options in a way that is more appetizing and appealing, as well as more affordable than the less healthy options, is likely to their encourage selection.


1. Ministry of Health (2008) A Portrait of Health. Key Results of the 2006/07 New Zealand Health Survey. Wellington: Ministry of Health.