'Bigger Health Gains' Seen From Broad Taxes on Unhealthy Foods

Liam Davenport

February 16, 2017

Major healthcare benefits could be gained and billions of dollars in healthcare costs saved with the introduction of a package of taxes and subsidies that target unhealthy foods while promoting healthier options, rather than a single sugar tax, argue Australian researchers.

Linda J Cobiac, PhD, School of Population and Global Health, University of Melbourne, Australia, and colleagues calculated in a population-based model that approaching half a million life-years and over A$4 billion (US$3.08 billion) could be saved with a combination of sugar, salt, and fat taxes, alongside a fruit and vegetable subsidy.

The research was published online February 14 in PLOS Medicine.

"This study adds to the growing evidence of large health benefits and cost-effectiveness of using taxes and regulatory measures to influence the consumption of healthy foods," the team writes.

"We believe that with such large potential health benefits for the Australian population and large benefits in reducing health sector spending on the treatment of noncommunicable diseases, the formulation of a tax and subsidy package should be given a more prominent role in Australia's public-health nutrition strategy."

The findings suggest the potential public-health benefit of individual taxes on sugary drinks, which have either been considered or introduced recently by governments, could be improved by adding levies on other unhealthy foods.

As reported by Medscape Medical News, it was estimated that the proposed UK graduated tax on sugar-containing soft drinks could significantly reduce obesity, diabetes, and dental caries, particularly if such drinks were reformulated to reduce their sugar content.

Furthermore, researchers have calculated that the 10% tax on sugar-sweetened beverages introduced by the Mexican government in 2014 in the face of strong industry opposition could lead to almost 200,000 fewer cases of diabetes and almost 20,000 fewer deaths, as well as cost savings of almost one billion international dollars over 10 years.

The authors of the current study noted in a release: "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."

To examine the cost-effectiveness of taxes on unhealthy foods containing, for example, saturated fat or excessive salt and sugar, and subsidies on healthy fruit and vegetables, the team constructed a population-based model of dietary-related diseases and healthcare costs, as well as food price elasticities.

Using 2010 data on the Australian population, the Australian Health Survey 2011–2012, and the Asia Pacific Cohort Study, they extrapolated the incidence, prevalence, and mortality of each dietary-related disease, as well as mortality from all other causes.

The changes in cost of treating diseases over the lifetime of the Australian population, determined at 22 million people, were calculated using Australian Institute of Health and Welfare data on disease costs and impacts.

Combining that with estimated changes in product prices and dietary patterns, as well as a cost of implementing new taxes and subsidies of A$22 million in 2010 dollars, according to the group, they conducted a cost-effectiveness analysis of 31 combinations of five taxation and subsidy options.

The taxes and subsidies were set so that, overall, there would be a change in the average weekly expenditure on food of less than 1%. The cost threshold per disability-adjusted life-year (DALY) was set at A$50,000.

Overall, it was estimated that the combination of taxes and subsidies could avert up to 470,000 DALYs in the Australian population, at a net cost saving of A$3.4 billion and a 100% probability of cost savings.

Of the individual taxes, the sugar tax led to the largest estimated health gain, at 270,000 DALYs averted, followed by the salt tax, at 130,000 DALYs averted, the saturated-fat tax, at 97,000 DALYs averted, and the sugar-sweetened beverage tax, at 12,000 DALYs averted.

The fruit and vegetable subsidy did not lead to an overall benefit when modeled on its own, at -13,000 DALYs averted, due to potential adverse cross-price elasticity on the consumption of other, less healthy, foods. However, it was an effective addition to the package of taxes, the team says.

The researchers write: "While food taxes and subsidies are not currently on the political agenda in Australia, there is recurrent interest in broadening the goods and services tax, which would lead to price changes on a wide range of food and drink products, and this could be an excellent opportunity to introduce an accompanying package of taxes and subsidies to encourage healthier eating in Australia."

Noting the potentially negative response to such changes from the food industry, they add: "It could be helpful if there were a legally binding global convention around diet, similar to the World Health Organization's Framework Convention on Tobacco Control, to support and protect government rights to implement taxes and regulatory measures that will improve public health."

Dr Cobiac is a member of the editorial board of PLOS Medicine. She was supported by a National Health and Medical Research Council Fellowship. The coauthors report no relevant financial relationships.

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PLoS Med. Published online February 14, 2017. Article

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