Can taxes and food subsidies help improve health outcomes?

Globally, millions of deaths each year can be attributed to poor diets, and these numbers are increasing. These deaths are preventable, and one strategy to encourage consumers to make healthier choices is through fiscal policy, such as subsidies or taxes. Examples include taxes on products known to be harmful to health, such as tobacco and alcohol, with the aim of discouraging consumers from purchasing these products.

The World Health Organization (WHO) has hired a team of researchers from UConn University and the University of Illinois at Chicago to assess whether policies similar to foodstuffs affect health, hoping to provide policy makers around the world with data on the results of these policy measures. . They recently published two papers in the Journal of the American Medical Association, one focusing on the economic and health consequences of taxes and food subsidies, and one focusing on the tax consequences of sugar-sweetened beverages.

One challenge the researchers have faced is that food taxes are politically challenging and difficult to implement, and so there are few examples to draw data from, says UConn Rudd Director of Economic Initiatives for Food and Health Policy and lead author Tatiana Andreeva. Additionally, Andreeva explains that these questions are relatively new, and while there is a wealth of data on purchasing behaviors, evidence for diet and health outcomes is less abundant. As a starting point, the researchers focused on data on subsidies and taxes together to take a comprehensive look at how these policies affect consumer behavior.

Tatiana Andreeva (Ocon Road Center)

“When we say food taxes, we mean a tax on unhealthy foods,” says Andreeva, associate professor in the Department of Agricultural and Resource Economics in the College of Agriculture, Health and Natural Resources. “An example is in Mexico, which in 2014 implemented a tax on non-essential energy-dense foods as part of a national strategy to tackle obesity. In Denmark, a tax on saturated fats has been abolished, so we don’t have much taxation or food policies as evidence of the effectiveness of food taxes, But we have a lot of sugar-sweetened beverage (SSB) taxes to study.”

As for subsidies, the idea is that if prices are lowered and healthy foods become more affordable, people will buy more. It is easier to find subsidies for fruits and vegetables, Andreeva says, and some countries also have subsidies for health products and basic foods to support nutrition for low-income people.

“For example, subsidies have been used extensively in the United States to subsidize nutrition, particularly for participants in food assistance programs, such as SNAP. One example of this is the Double Up Food Bucks, where SNAP participants can purchase vegetables at farmers markets, And for every dollar spent in SNAP benefits, the buyer gets $2 in products. That’s a pretty big boost.”

For their latest studies, the researchers conducted meta-analyses in which they evaluated peer-reviewed studies published worldwide to look at the effect of subsidies and taxes on purchases, prices, consumption, diet, and data on other available outcomes.

“We assessed how purchases of fruit and vegetables changed in response to fruit and vegetable subsidies, and estimated how much consumer demand changed as prices fell through subsidies,” Andreeva says.

The results showed a significant improvement in consumer purchases and demand for fruits and vegetables. In the case of taxes on SSBs, sales also drop significantly. Both policy measures worked as intended; However, consumers have not responded as drastically to changes in fruit and vegetable prices as the researchers expected, Andreeva says.

From the available data, Andreeva says they also did not see a significant change in terms of the impact of the subsidy on consumption.

“This may be because there haven’t been enough studies specifically looking at consumption yet.”

With millions of data points from sales, it’s easy to analyze purchases, but Andreeva says consumption — whether purchases are consumed and what health outcomes for the consumer are — is more difficult to measure, because it requires more expensive and time-consuming data collection and follow-up. For example, through surveys and interviews. Although more intense, Andreeva points out that this health-focused data is essential to understanding the health outcomes of these policies.

Plastic soda bottles on a white background.  (drink, drink) January 20, 2021 (Sean Flynn/UConn Photo)
Taxes on sugar-sweetened beverages were effective in reducing consumption (Sean Flynn/UConn Photo).

Successful examples of small sales taxes on sugar-sweetened snack and beverage items in various regions in the United States and Mexico show that these taxes are promising ways to motivate healthy decisions. Andreeva explains that the argument that items such as SSBs are unnecessary makes them easier to tax:

“There’s no nutrition in these drinks. While eating, any food you look at has some nutrients, and it’s a lot harder to tax. Also, it’s easy to apply beverage taxes because they target a single industry, whereas if you tax snacks, you’ll have Much broader range of companies affected, and you’re going to get more opposition from more industries.”

The need for specific definitions of what is considered healthy or unhealthy is shown in the Danish example with the saturated fat tax. Andreeva explains that the measure was quickly canceled due to opposition caused by the tax’s impact on meat and dairy prices.

Bigger taxes also get more rollback, while smaller taxes, like the 6.35% sales tax on candy and sodas applicable in Connecticut, many people don’t realize they’re paying.

Measures such as taxes and subsidies are just one potential strategy that can be implemented to help consumers make better choices. However, there are greater systemic barriers to those trying to make healthy food choices, Andreeva says. Even if prices are low, do people have a grocery store nearby or transportation to one? Are there farmers markets nearby? Do consumers have the knowledge, facilities, or time to prepare healthy meals?

Although the data shows some increase in sales of healthy foods, the increases may not be as strong because of these additional drawbacks.

“A big part of this research is finding out the effect on healthcare costs or whether taxes or subsidies help reduce diabetes or obesity,” Andreeva says. Do we see that reflected in health care costs? Unfortunately, we don’t see this evidence yet because we haven’t had enough time since subsidies or taxes were in place. One day we hope to see when the money is spent on subsidies, we can see savings elsewhere. We hope to be able to show policy makers how much more tax increases or subsidies will affect health.”

Leave a Reply

Your email address will not be published.