The Australian Food and Grocery Council (AFGC) has rejected a proposal from a suburban Melbourne council that called for major food outlets to be taxed up to 400 per cent more on commercial rates than other businesses.
The Darebin City Council’s proposal became public this week, inspiring comment and opinion from all sides.
Some argue it would be a step in the right direction of tackling rising obesity rates in Australia and, while others, including the AFGC say it would not achieve such an objective.
A report by local councillors said the introduction of the tax on fast food outlets including McDonald’s and KFC would “curb the increase” of people developing Type 2 diabetes.
But the AFGC’s acting chief executive, Geoffrey Annison said the move is “ill-conceived, impractical and would have no impact at all on obesity levels”.
“Proposals like Darebin Council’s are simplistic and add nothing to either the debate or the outcome. The Henry Tax review said differential taxation was a poor regulatory option for influencing food choice.
“If you were to go down that line, you would have to include a range of food outlets including supermarkets, petrol stations, bakeries, coffee shops, fish and chip outlets, and Thai, Indian and Pizza restaurants as they all sell fast ready-to-eat takeaway foods and not to do so would be inequitable.”
The suggestion of a “fat tax” began last year, when Denmark developed a model to put a tax on foods high in saturated fats.
Many believe Australia needs a similar tax, to address rising obesity rates, and raise funds to prevent and cure obesity-related diseases including Type 2 diabetes.
Australian researchers examined three options for beating obesity and discovered they could prevent about 220 000 cases of type 2 diabetes nationwide by 2025, which was released this week.
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The team from the Baker IDI Heart and Diabetes Institute identified a high-risk prevention strategy to begin tackling the obesity epidemic and rise in the number of type 2 diabetes.
They modelled future diabetes cases that could be averted using one of three strategies, the ‘junk food tax,’ counselling and gastric banding.
It found a nation-wide tax on unhealthy foods could lead to body mass index decreasing by around 0.5kg/m2.
A tax on high-sugar drinks has also been suggested, which a study in January found could save 26 000 US lives per year.
But new research out of the UK today has found that any tax on unhealthy foods or drinks would have to be more than 20 per cent for it to have any effect.
Researchers from the University of Oxford found that while more countries are introducing, or considering introducing taxes on unhealthy food and drinks, existing evidence suggests that taxes on a vast range of unhealthy foods would be more effective than focusing on just one.
In the UK, for example, the current “fat tax” regulations stipulate that only hot foods high in saturated fat are subject to the tax, leading to the largest baker, Gregg’s Bakery, to contest its application in court.
It says that because it does not make any effort to keep its sausage rolls warm after they are cooked, they should not be classified as ‘hot food,’ and therefore should not be taxed.
The Oxford study found that the most effective food group to be taxed would be sugary drinks.
“For example, a US study found a 35 per cent tax on sugar sweetened drinks in a canteen led to a 26 per cent decline in sales,” Oliver Mytton, leader of the study, said.
“Meanwhile, modelling studies predict a 20 per cent tax on sugary drinks in the US would reduce obesity levels by 3.5 per cent, and suggest that extending VAT (at 17.5 per cent) to unhealthy foods in the UK could cut up to 2,700 heart disease deaths a year.
“Opinion polls from the US also put support for tax on sugary drinks at between 37 per cent and 72 per cent, particularly when the health benefits of the tax are emphasised.”
The researchers also found that education surrounding energy intake, exercise and nutritional content is important for policy makers to consider when implementing changes.