Can food taxes and subsidies help improve health outcomes?

Globally, millions of deaths each year can be attributed to poor diets, and these numbers are rising. These deaths are preventable, and one strategy to encourage consumers to make healthier choices is through fiscal policies, such as subsidies or taxes. Examples include taxes on products known to be unhealthy, such as tobacco and alcohol, with the aim of discouraging consumers from purchasing these products.

The World Health Organization (WHO) has enlisted a team of researchers from UConn and the University of Illinois Chicago to assess whether similar food policies affect health, hoping to provide policymakers around the world with data on results of these political measures. . They recently published two articles in the Journal of the American Medical Association, one focused on the health and economic outcomes of food taxes and subsidies, and another focused on the outcomes of taxes on sugary drinks.

One challenge the researchers found is that food taxes are politically challenging and difficult to implement, so there are few examples from which to draw data, says Director of Economic Initiatives at the UConn Rudd Center for Food Policy and Health. and lead author Tatiana Andreyeva. Furthermore, Andreyeva explains that these questions are relatively new, and while there is a wealth of data on purchasing behaviors, the evidence on diet and health outcomes is less abundant. As a starting point, the researchers focused on tax and subsidy data to gain a broad view of how these policies can influence consumer behaviors.

Tatiana Andreeva.
Tatiana Andreyeva (UConn Rudd Center)

“When we say food taxes, we mean a tax on unhealthy foods,” says Andreyeva, an associate professor in the Department of Agricultural and Resource Economics in the College of Agriculture, Health and Natural Resources. “An example is Mexico, which in 2014 implemented a tax on non-essential high-calorie foods as part of a national strategy to tackle obesity. In Denmark, a tax on saturated fats was repealed, so we don’t have many food taxes or policies as evidence of the effectiveness of food taxes, but we do have many taxes on sugar-sweetened beverages (SSB). acronym in English) to study.”

For subsidies, the idea is that if prices are reduced and healthier foods are more affordable, people will buy more. Andreyeva says that it is easier to find subsidies for fruits and vegetables, and some countries also have subsidies for healthier products and basic foods to support the nutrition of people with lower incomes.

“As an example, subsidies have been used extensively in the US to support nutrition, particularly for participants in food assistance programs such as SNAP. One example is the Double Up Food Bucks program, where SNAP participants can buy vegetables at farmers’ markets, and for every dollar spent on SNAP benefits, the shopper gets $2 worth of produce. It’s a pretty significant subsidy.”

For their recent studies, the researchers conducted meta-analyses in which they evaluated peer-reviewed studies published around the world to look at the effect of subsidies and taxes on purchases, prices, consumption, diet, and health data. other results available.

“We assessed how purchases of fruits and vegetables change in response to subsidies for fruits and vegetables and estimated how much consumer demand would change with lower prices through subsidies,” says Andreyeva.

The results showed a significant improvement in consumer purchases and demand for fruits and vegetables. In the case of taxes on sugary drinks, sales also drop significantly. Both policy measures worked as intended; however, consumers did not respond as drastically to changes in fruit and vegetable prices as the researchers expected, Andreyeva says.

From the available data, Andreyeva says they also didn’t see a significant change in terms of the effect of subsidies on consumption.

“This could be because there haven’t been enough studies looking specifically at consumption yet.”

With millions of sales data points, purchases are easier to analyze, but Andreyeva says consumption — whether purchases are consumed and what the consumer’s health outcomes are — is much more difficult to measure, requiring a more expensive and time-consuming data collection. and monitoring; for example, through surveys and interviews. Although more intensive, Andreyeva points out that this health-focused data is vital to understanding the health outcomes of these policies.

Plastic soda bottles on a white background.  (Drink, drink) Jan. 20, 2021. (Photo by Sean Flynn/UConn)
Taxes on sugary drinks have been effective in reducing consumption (Sean Flynn/UConn Photo).

Successful examples of small sales taxes on sugary snacks and beverages in different areas of the United States and Mexico show that these taxes are promising ways to incentivize healthier choices. Andreyeva explains that the argument that items like SSBs are non-essential makes them easier to tax:

“There is no nutrition in these drinks. Whereas for food, any food you look at has some nutrition, and it’s much harder to tax. Also, beverage taxes are easier to implement because they are targeted at one industry, whereas if you tax snacks, you have a much wider range of businesses that are affected and you get more opposition from more industries.”

The need for specific definitions of what is considered healthy or not is demonstrated by the example of Denmark with the tax on saturated fats. Andreyeva explains that the measure was quickly repealed due to opposition stemming from the tax’s impact on meat and dairy prices.

Larger taxes also get more pushback, while with smaller taxes, like Connecticut’s 6.35% sales tax on candy and carbonated beverages, many people don’t know they’re paying it.

Measures such as taxes and subsidies are just one potential strategy that can be implemented to help consumers make better choices. However, there are larger systemic barriers for those trying to make healthier food choices, says Andreyeva. Even if prices are low, do people have a grocery store nearby or transportation to one? Are there farmers markets nearby? Do consumers have the knowledge, facilities, or time to prepare healthy meals?

Although the data shows some increase in sales of healthier foods, the increases may not be as strong due to these additional barriers.

“A lot of the point of this research is to see the impact on health care costs or whether taxes or subsidies help reduce diabetes or obesity,” says Andreyeva. “Do we see this reflected in health care costs? Unfortunately, we don’t see that evidence yet because we haven’t had enough time since the subsidies or the taxes were put in place. One day we hope to see when money is spent on subsidies, we may see savings elsewhere. Hopefully, we can show policymakers how much of an impact raising taxes or providing subsidies has on health.”

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