Our estimate of the effect on cardiovascular disease of introducing taxes on the major sources of dietary fat is significantly different from that reported previously by Marshall.14
The change in dietary saturated fat intake that we predicted would result from such a fat tax is smaller than Marshall predicted. Marshall's work had a number of limitations. Firstly, it used the author's own estimates of the effect of taxation on the consumption of food, rather than empirically obtained values. The empirical elasticity values are less than his estimates and the empirical data suggest there will be greater substitution with other high‐fat products than he predicted. Secondly, the analysis was restricted to saturated fat and did not take account of the impact of a tax on the intake of other nutrients, such as polyunsaturated fat and salt. Our model suggests that beneficial reductions in saturated fat are partly offset by reductions in polyunsaturated and monounsaturated fat and that a small rise in salt intake from such a tax would have a detrimental effect on mortality from cardiovascular disease.
The cross‐elasticity effects show that food consumption is highly interdependent and difficult to predict. Our model suggests that there could be a variety of unintended potentially detrimental effects, caused by the estimated cross‐price elasticities of demand. For example, we observed that reducing saturated fat consumption tended to increase salt consumption and that fruit consumption tended to fall as a result of taxation on milk and cream.
When designing the best outcome taxation strategy, we found it hard to achieve a reduction in serum cholesterol: when taxing broad categories of foods, if the intake of saturated fat is reduced the intake of other fats such as polyunsaturates and monounsaturates is also reduced. The reduction in intake of polyunsaturates and monounsaturates causes a rise in serum cholesterol that counters the fall achieved from the reduction in saturated fat. In addition, we observed a trade off between the reduction in the proportion of energy derived from saturated fat and a reduction in salt intake; some food products high in salt, such as some cereal products, also tend to be high in sugar and therefore energy dense; so reducing salt intake reduces non‐fat calorie intake, increasing the proportion of energy derived from saturated fat, which tends to increase serum cholesterol. The additional benefit gained from taxing items outside the least healthy category was small. Moreover, as the more healthy food items were taxed, in addition to the less healthy food items (ie, extending VAT to nearly all food items), the potential number of lives saved tended to fall slightly and a further reduction in fruit and vegetable consumption was observed. Further gains would best be achieved by a higher rate of taxation on least healthy food items, rather than extending the VAT at 17.5% to healthier food items. Food consumption is relatively insensitive to price changes, such that a taxation rate of 17.5% is likely to reduce the intake of nutrients such as salt and saturated fats by no more than 5–10%. So the scope for significantly altering the national diet by judicious use of VAT seems limited. Greater change could be achieved with a higher level of taxation, but this is unlikely for political and economic reasons. To achieve large changes, such as 3–6 g per day reduction in salt intake8
or 0.60 mmol/l reduction in serum cholesterol,7
which have been advocated, it may be necessary for the food industry to produce foods with less salt and less saturated fat. Rose argued that small changes in risk factors for diseases of high prevalence can produce meaningful change at a population level,29
and our results suggest that, although the percentage changes in the incidence of cardiovascular disease are small, the actual number of lives saved could be substantial because of the high incidence of cardiovascular disease in the UK. Fat taxes would not eliminate dietary‐related diseases, but could be one of several tools used to achieve that goal.
What is already known
- Fat taxes have been proposed to alter consumption patterns and reduce the incidence of diet‐related disease.
- Fat taxes will be regressive and resisted by the food industry. Most taxes levied on food are aimed at raising revenue, and the effect on health is uncertain.
What this paper adds
Fat taxes may be used to produce modest changes in diet, which at a population level would have a meaningful effect on mortality. More research is needed to better understand the potential effects of any fat tax, particularly the effect on the poor.
Fat taxes could be used, by governments to improve national diet and reduce the incidence of diet‐related disease. Careful consideration needs to be given to designing fat taxes, examining the effect of any taxation on a range of nutrients.
Our data should be interpreted cautiously. Firstly, our estimates of the effect of targeted food taxes on the number of deaths are crude and limited to the effects of dietary fat and salt on cardiovascular disease; they give only a rough guide to the magnitude of the effects that we may see. We have not looked at the effect of other nutrients on health, which are not well characterised; about one third of the cancer mortality could be related to diet.7
Secondly, the model assumes that all food purchased for consumption at home is eaten: we make no allowance for the proportion of food that is not eaten, but discarded. We have also assumed that food eaten outside the home is unaffected by the taxation. Thirdly, the food categories used in the model contain a wide range of products, and it may not be reasonable to assume that all products within each category will behave in the same way: our experience, from using the model, suggests that better targeting of taxation to smaller more precise food categories produces better results. Fourthly, the relationships between price changes and changes in health have been captured using aggregate population data. A variety of factors other than price influence individual food purchase behaviour, including the palatability of foods, attitudes to and knowledge about foods, and some of these factors are captured in price elasticity of demand. Similarly, a variety of factors other than diet, such as age, sex and lifestyle factors, like smoking, influence health. A more complex model could in theory incorporate these factors. Fifth, our elasticity data are based on the UK population, so making predictions for other countries, particularly with respect to possible cross‐price elasticity effects, may be inappropriate.
Other approaches to fat taxes, such as taxes on specific ingredients such as salt or added sugar, are beyond the scope of this paper. The type of fat tax we have modelled in this study could be portrayed as a restriction on personal freedom. However, it could also be considered as a counterweight to other market influences, such as advertising, that affect our choice of food and the associated health benefits and harms.
One common criticism of fat taxes is that they are regressive—that is, that low‐income households would pay a greater percentage of their income on fat taxes than higher‐income households.30
An analysis of the effects on different income groups was not possible using our model, because the National Food Survey does not provide price elasticity data split by economic group. However, theoretically, those on low incomes should be more price sensitive in their pattern of demand and therefore may be more likely to change their consumption patterns and obtain larger proportional health benefit, as seems to happens with cigarette consumption.11