Rupika Malhotra, MSc
Scientific and Regulatory Affairs Associate, Dicentra

With recent developments and proposed changes to energy drink regulations in Canada, questions on taxation of health harming foods have come to the forefront. Globally, several debates on whether or not government bodies should implement taxation for the benefit of public health, have taken place. While the health lobbying groups have urged such measures as an important factor in “a combination of interventions [that are] likely to be most successful to improve current [country] diets”, the food industry is expressing opposing opinions suggesting such measures are “unnecessary” and “ineffective” (Halliday, 2011).

Various parts of the European Union have already taken steps forward despite divided opinions in taxing various foods that fall into any specific category thought to aid in poor dietary habits and the growing obesity-related and diabetes-related illness statistics. Furthermore, several groups have advocated that the taxation of substances such as tobacco and alcohol were introduced based on scientific evidence of harmful effects upon consumption, hence foods contributing to poor dietary habits should be treated the same. Researchers in the UK, consulting on the impact of such an implementation have suggested that “the fat tax and subsidy policy would be effective at moving diets ‘in a direction consistent with improvements in diet-related health’- but mainly because the subsidized fruit and veg helped people achieve five-a-day targets.” (Halliday, 2011).

As of September 1, 2011 Denmark has introduced a ‘fat tax’ “affecting foods which contain more than 2.3% saturated fat, including butter, dairy and some Danish pastries, plus meat and pre-cooked fast foods. Each kilogram of saturated fat will be taxed at £1.84 [16 DKK or CAD$3.00]. That means the price of a small pack of butter will rise by about 25p [2.13 DKK or CAD$0.40]” (Stone, 2011).

In similar fashion, Hungary has also introduced a fat tax on the same date as Denmark, targeting foods bearing fat, sugar and salt at specific levels or higher. Potato chips and other salty snacks will be taxed at 200 Hungarian forints (CAD$0.95) per kg if salt content exceeds 1 %, with the exception of bread and pastry products. For pre-packaged pastry items if sugar exceeds 25% and within food flavourings if salt content exceeds 5%, a tax of one forint (CAD$.005) per kg will apply (Bouckley, 2011).

Concerns of the consumption of chocolate had also brought health professionals in Scotland to vote against or in favour of a fat tax on chocolate products. With two votes against the motion, chocolate products were bypassed from taxing legislations in 2009 (William Reed Business Media, 2009).

In the coming days, the industry is preparing to readjust and reformulate based on new legislations set to come out from Ireland and France: increasing taxation on sugary soft drinks from 5.5 % to 19.6 % (Montague-Jones, 2011). Romania is also said to follow in the footsteps of Denmark and Hungary in implanting a fat tax on similar types of foods.

In the UK, health activists are urging the government to take a more severe approach to the “soft measures” previously introduced as these are now realized to be inadequate in combating disease prevalence. On the other hand, industry representatives such as the Food and Drink Federation (FDF) have spoken against such “harsh” measures. The pan-European food industry body, Food and Drink Europe, have deemed fat taxes as “discriminatory” indicating that particular types of food are being unfairly targeted, when it is the overall dietary habits that are the problem. Lower-income sections of society are also said to be affected by such measures as it is this part of the economic structure that typically purchases the affected food products in the greatest numbers (Starling, 2011).

Innovation and consumer demands bring with them the moral debate about personal health versus industry accountability for dietary intakes and consequences. Given recent trends of Health Canada to follow the lead of EFSA and FDA in food regulations, should the food industry and consumers prepare for taxation on various food types as a mechanism to combat rising dietary related health concerns?

For further information on scientific and regulatory affairs in the food and beverage category please contact our experts at Dicentra.

dicentra provides regulatory and scientific solutions for accelerated business growth. We specialize in the areas of natural health products, dietary supplements, foods, cosmetics and OTCs. We can be reached at 1-866-647-3279 or at dicentra.com

References

1) Bouckley, Ben. “Hungarian ‘chip tax’ wrecks Intersnack investment”. Food Navigator.com. William Reed Business Media. http://www.foodnavigator.com/Financial-Industry/Hungarian-chips-tax-wrecks-Intersnack-investment. September 23, 2011. Accessed: October 6, 2011.

2) Halliday, Jess. “Fat tax should be part of policy measures on diets: Study”. Food Navigator.com. William Reed Business Media. http://www.foodnavigator.com/Legislation/Fat-tax-should-be-part-of-policy-measures-on-diets-Study . January 21, 2011. Accessed: October 6, 2011.

3) Montagues-Jones. “French MP threatens tax hike on sweetened soft drinks”. Food Navigator.com. William Reed Business Media. http://www.foodnavigator.com/Legislation/French-MP-threatens-tax-hike-on-sweetened-soft-drinks. July 12, 2011. Accessed: October 6, 2011.

4) Starling, Shane. “Hungary prepares for ‘discriminatory’ September 1 fat tax”. Food Navigator.com. William Reed Business Media.http://www.foodnavigator.com/Legislation/Hungary-prepares-for-discriminatory-September-1-fat-tax. July 26, 2011. Accessed: October 6, 2011.

5) Stones, Mike. “Danish fat tax divides UK opinion”. Food Navigator.com. William Reed Business Media. http://www.foodnavigator.com/Legislation/Danish-fat-tax-divides-UK-opinion. October 3, 2011. Accessed: October 6, 2011.

6) William Reed Business Media. “News in Brief: Doctors block choc fat tax motion”. Food Navigator.com. William Reed Business Media. http://www.foodnavigator.com/Legislation/Doctors-block-choc-fat-tax-motion. March 13, 2009. Accessed: October 6, 2011.