A tax to protect public health?

MONTREAL, Nov. 15, 2012 /CNW Telbec/ - For several years, the Weight Coalition has requested the introduction of a soda tax to fight obesity. Along the same lines, the Ontario Medical Association recently called for a tax on foods deemed to be too high in sugar or fat. A new publication from the Montreal Economic Institute (MEI) suggests that apart from making the government fatter, this type of action will not really have any impact on weight, as shown by a Danish government's decision to abolish its "fat tax" introduced a year ago.

A renowned Canadian doctor and an associate researcher at the MEI, Dr. David Gratzer points out that the scientific literature is divided on the effectiveness of taxation in fighting obesity. Several studies have questioned the optimistic projections of tax proponents that say they could lead to an appreciable decline in the level of obesity.

"Changing dietary habits is not easy. Someone who sees the price of a 591 mL soft drink bottle jump 10% might change his behaviour, but not necessarily in the desired direction. For instance, he might choose another product not subject to the tax, like a large coffee with two creams and two sugars, which happens to contain approximately the same number of calories, around 260," explains Dr. Gratzer.

As for the possibility of extending the tax to cover a larger number of products to deal with the possibility of substitution, this would include nutritious beverages like smoothies and fruit juices, which is not a good thing according to Dr. Gratzer. In sum, introducing a new tax is not the best strategy if we are truly concerned with tackling the obesity problem.

"Basically, taxing sodas would provide the illusion of addressing the obesity problem. In reality, this tax would have very little effect on those extra pounds, which the Weight Coalition actually recognizes, seeing this measure as a lever that will provide funds for other prevention activities,'" says Jasmin Guénette, Vice President of the MEI.

The Economic Note entitled Are Soda Taxes a Cure for Obesity? was prepared by Dr. David Gratzer, Canadian doctor, author and senior fellow at the MEI, in collaboration with Jasmin Guénette, Vice President of the MEI. It can be consulted free of charge at iedm.org.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE: MONTREAL ECONOMIC INSTITUTE

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