Sales Tax on Food to Prevent Obesity?

First an Excerpt from the article, “A sales tax is better at promoting healthy diets than the fat tax and the thin subsidy”:

“We analyze how a sales tax levied on all food products impacts the consump- tion of healthy food, unhealthy food, and obesity. The sales tax can stimulate the consumption of healthy meals by lowering the time costs of food preparation. Moreover, the sales tax lowers obesity under more general conditions than a tax on unhealthy food (fat tax) and a subsidy on healthy food (thin subsidy). We cal- ibrate the model using recent consumption and time use data from the US. The thin subsidy is counterproductive and increases weight. While both the sales tax and the fat tax mitigate obesity, the former imposes a lower excess burden on consumers.“

My Two cents:

If the proposal seeks to offset “bad” foods with a tax, who is determining the definition of “bad” or “good” foods? What is the criterion that would make a food fit into either of these categories? Next, once that is determined, how is the actual tax rate calculated? If the objective is to move consumption away from “bad” foods, and to move it to “good” foods, consumers will simply seek viable substitutes for those “bad” foods. Moreover, if a subsidy is provided, what are the consequences with regards to the economic cost of making “good” foods? The cost will rise, hence the need for a subsidy, and giving people the subsidy will simply encourage them to buy some “good” food, but does it really stop them from eating the “bad”?

Read the study here:

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