Canadian Taxation

Taxing ‘unhealthy’ foods won’t reduce obesity

Published On July 30, 2013 | By Joseph (Ken) | Government

sin taxEver hear of the term “Sin Tax“?  

As per Wikipedia, “A sin tax is a kind of sumptuary tax: a tax specifically levied on certain generally socially proscribed goods and services, for example alcohol and tobacco, candies, soft drinks, fast foods, coffee and gambling.”

The article: Taxing ‘unhealthy’ foods won’t reduce obesity refers to it as a “fat tax” but fundamentally it is a “sin tax”.

“It seems health associations are once again calling for a “fat tax;” taxes on foods that some nutritionists and researchers don’t want us to eat or drink.  No matter the good intentions, taxing certain foods to make us healthier remains bad public policy. There are several reasons why this is so, the most fundamental being that such taxes affect everyone regardless of their girth or lifestyle choices.

“Consider the case of a Canadian who runs three times a week, plays sports from time to time, eats a well-balanced diet, and is in excellent physical condition. If she likes to relax with a pop and watch a movie on the weekend, or enjoy a chocolate bar with lunch, why should she pay more to do so?

“The consumption of less healthful and/or fattier foods when balanced with other foods and exercise will not lead to a person being overweight or obese, nor will it necessarily lead to poorer health. No single food or beverage can be held responsible for weight gain.

Overly simplistic solutions to obesity that vilify an industry or food product are bad public policy. The reality is that ‘junk food’ taxes or sugary drink taxes are ineffective, blunt instruments that fail to recognize the complex and manifold causes of obesity. It’s time we put the idea of such taxes in their rightful place: the junk bin.”

I agree with the argument but I disagree that the government charges a “sin tax” because it wants to “[reduce] transactions involving something that society considers undesirable.”  Instead it does so because the reality is that it is a captured market – the market will continue to exist no matter what tax they charge. 

A person with an addiction doesn’t kick the addiction out of any recognition that it’s expensive or that the cost is increasing – the government’s only risk in charging a “sin tax” is that the consumer (aka “addict”) looks to the black market to feed their addiction, once the cost of the addiction exceeds the addicts ability to afford it, or the addict resorts to crime to get the funds to pay for the addiction.  

Government tends to tax “soft” addictions like cigarettes, alcohol, gambling and (soon) junk food.  A soft addiction is something that has a low risk in causing your immediate death, instead killing you slowly and therefore allowing the government deniability in contributing to your death for their financial benefit.

Yet, in a “free” society (vs nanny state), people should have the right to choose to kill themselves slowly in any way they choose.

I find it odd to see the packaging on cigarettes – pictures of poisoned and cancer ridden organs – still making tobacco companies millions.  Will we see the same type of packaging coming to fast food restaurants and junk food isles – pictures of clogged arteries on our McDonald’s fries and Nacho chip bags?  

One could argue that it would make more sense to do that (educating the individual as to the long-term consequence of their behaviour) rather than charge a “sin tax” or “fat tax”, although it seems that cigarette smokers have gotten conditioned to the images and now basically ignore them.

Like this Article? Share it!

About The Author

Joseph (Ken)
(Ken) is a Registered Public Accountant with over 25 years of public practice experience in the accounting profession. Ken specializes in accounting information systems, taxation and financial reporting.

One Response to Taxing ‘unhealthy’ foods won’t reduce obesity

  1. Pingback: Joseph Lea and Associates Inc. Letter to the editor re: "It's time for further taxes on junk food"