February 23, 2017

The Case for A Health Tax

If taxes could buy you some disability-free years as you age, would you be willing to pay them?

No one likes taxes, and we often call them one of the only two certainties in life. But what if taxes could delay death, or at least buy yourself some disability-free years as you age? Would you be willing to pay them if the benefits outweighed the cost?

Many Western countries have proposed or implemented taxes on sugary beverages and foods high in salt, sugar and saturated fat. Some have provided subsidies on fruits and vegetables.

When the taxes were combined with subsidies for fruits and vegetables, even more disability-adjusted life years were reduced. Healthcare costs also came down.

Researchers at the University of Melbourne, Australia toyed with various combinations of such taxes and subsidies to study the effect on death and morbidity rates among Australians. They also looked at the effect on healthcare costs and designed models that would increase food cost for the average household by less than one percent.

The impact of taxes and subsidies was measured as an increase in disability-adjusted life years (DALYs), or years of healthy life lost due to disease. A sugar tax had the greatest impact — it prevented 270,000 DALYs. This translates to an extra 1.2 years of health for every Australian who was alive in 2010.

“Few other public health interventions could deliver such health gains on average across the whole population,” the authors said, in a statement.

The next largest benefit came from a tax on salt, which resulted in an estimated savings of 130,000 DALYs. A tax on saturated fat could cut 97,000 DALYs; a tax on sugary drinks could prevent 12,000 DALYs. When the taxes were combined with subsidies for fruits and vegetables, even more DALYs were averted and healthcare costs also came down.

Subsidies alone, though, did not show a clear health benefit.

In US dollars, $2.3 billion in healthcare costs and over 470,000 DALYS could be saved using the Australian model of taxes and subsidies.

This was a simulation study, and it comes with a degree of uncertainty for a number of reasons. For one thing, studies like this one rely on prior research that estimates the motivation of the public to accept changes in food prices. Issues with the food industry implementation must also be considered.

What this study does do is add to the evidence regarding the way the use of taxes and other regulatory measures could promote healthy eating, provide sizeable health benefits and reduce health care costs. Policymakers should keep these options in mind when formulating public health and nutrition policies.

“Several countries have imposed taxes on sugary drinks, with the UK the latest to consider such a policy. Our research suggests that even bigger health gains and cost savings may be possible with food taxes and subsidies on a wider range of foods,” the authors added.

The study is published in PLOS.

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