Fat Tax – Is America About to Start Charging Businesses for Fat Employees?

Across all ages and backgrounds, obesity is one of the most serious public health issues. In fact, approximately 70% of adults in the United States are overweight. Among them, about one-third are obese.

What makes obesity such a risk factor? Many chronic diseases exist, including heart disease, stroke, type 2 diabetes, and certain forms of cancer.

Among the solutions proposed for the obesity epidemic is a fat tax.

Fat Tax 101

In general, a fat tax is a tax on unhealthy foods and drinks, such as sugary drinks, fast food, and processed foods. By imposing a fat tax, people will be discouraged from consuming unhealthy foods and encouraged to make healthier choices.

However, this isn’t exactly a revolutionary idea.

According to the Metabo Law of Japan, companies and local governments are taxed if their employees or residents don’t meet certain health landmarks. As a result of the law, which passed in 2008, residents can live a healthier lifestyle.

Every year, companies must measure the waists of their employees as required by law.

An employer is fined if an employee’s waist measurement exceeds 33.5 inches (85 cm) for men or 35.4 inches (90 cm) for women. Counseling, motivational support, and email and phone monitoring are provided to the employee.

However, October 2011 saw Denmark introduce the world’s first “fat tax.” Its aim was to reduce obesity and cardiovascular disease.

In addition to milk, butter, cheese, oil, meats, and processed foods like frozen pizza, all foods that contain more than 2.3% saturated fat were subject to the tax.

As a result of the tax, saturated fats now cost 16 Danish kroner (about $3) per kilogram (about 2.2 lbs).

A number of countries have attempted to tax junk food since then, including Hungary, Mexico, India, and the United Kingdom.

Furthermore, sugar-sweetened beverages (SSBs) are blamed for the obesity epidemic, so SSB taxes are in place in Albany, Berkeley, Oakland, and San Francisco, as well as Boulder, Philadelphia, and Seattle.

Does a fat tax work? This article discusses the pros and cons of the fat tax as well as some alternatives to answer that question.

The Benefits of a Fat Tax

Among the potential benefits of a fat tax are:

Reduced obesity rates.

In order to reduce obesity rates, a fat tax can be implemented to increase the cost of unhealthy foods.

For example, it was the goal of the Metabo Law to reduce obesity by 25%. The obesity rate in Japan stands at a mere 4.3% as of 2023. Therefore, the policy has been a great success. But, what other benefits have there been?

Improved public health.

As a result of a fat tax, fewer people would develop chronic diseases linked to obesity, which may result in improved public health.

According to some studies, a 55% tax rate would result in a 0.7% decrease in overweight and obese individuals.

Promotes healthier food choices.

Imposing a fat tax can encourage people to choose healthier food and beverages. Studies have shown that when unhealthy foods become more expensive, people tend to eat fewer of them.

According to a UC Berkeley study, soda consumption in Berkeley’s low-income neighborhoods dropped by 21 percent after the city imposed a penny-per-ounce tax on sugary beverages.

Approximately 73% of consumers in Hungary reduced their consumption of the targeted products four years after the tax was introduced. Over two-thirds of these chose healthier alternatives, including mineral water, fresh fruit and vegetables, homemade sweets, and herbs and spices.

Reduced healthcare costs.

The obesity epidemic is one of the major causes of healthcare costs. Individuals and society could benefit from reducing obesity rates.

In fact, with a 10-percent reduction in body weight, overweight people can reduce lifetime medical costs by $2,200 to $5,300. There are also external costs associated with obesity, such as mortality and health insurance premiums.

Generates revenue.

The revenue generated by a fat tax can be used to fund nutrition education and physical activity programs.

Every year, the tax generates more than $15 million in San Francisco alone. A variety of health and healthy-eating programs across the city will benefit from the money, including Urban Sprouts, Chinatown Task Force on Children’s Oral Health, and the city’s school nutrition program.

As well as these direct benefits, a fat tax could also have some indirect benefits, such as:

• Encourage food manufacturers to produce healthier foods. Healthy food options may be more likely to be produced if consumers rarely purchase unhealthy foods.
• Educate consumers about healthy eating. Health risks associated with unhealthy foods and beverages can be raised with a fat tax, encouraging people to make healthier choices.

The Drawbacks of a Fat Tax

Fat taxes may reduce the consumption of unhealthy foods and beverages, but they have a number of drawbacks as well. It’s likely that these consequences caused Denmark to repeal the tax in 2012.

It is difficult…