How Governments Could Use the Excise System to Implement Fast Food Consumption Reduce Policy - Assignment Example

How Governments could use the Excise System to Implement a Policy that Reduced People’s Fast Food Consumption Name: Course: Tutor’s name: Date: Background to Obesity Statistics published by the World Health Organisation in 20111 reveal that approximately 500 million people worldwide were obese in 2008. In the medical field, a person is considered obese if their Body Mass Index (BMI) exceeds 25. The WHO report goes further and states that the risk factors for health conditions such as cardiovascular disease, diabetes, musculoskeletal disorders and some cancers, are higher in obese people when compared to people whose BMI is less than 25. Apart from the medical problems, national economies also suffer the consequences of having a significant percentage of the population considered obese. Kuchler and Ballenger2 for example estimate that the US incurred a total of $117 billion in 2000 alone; costs that were used either directly or indirectly in addressing obesity-related conditions. But where does the issue of fast foods come in? Well, according to different researchers3,4 two lifestyle factors receive all blame for the increased rate of obesity throughout the world. The first lifestyle factor is the fast food culture that has permeated all countries irrespective of their geographical position; the second factor is the fact that people do not exercise as much as they should, and therefore do not burn calories in a manner that would retain their BMI at healthy levels. Although many governments consider the consumer as a sovereign individual who is capable of making choices that upholds optimal wellbeing, the prevalence of fast food outlets coupled with the obesity statics sends a clear message that maybe some sought of policy intervention is needed in order to stem the ‘obesity epidemic’. After all, with obesity generating huge social costs and becoming a threat to social welfare, governments need not pay a blind eye to the problem in the hope that consumers will realise the need to remain healthy and hence quit their overindulgence in fast food habits. Excise Tax Excise tax on fast foods is not an entirely new concept. The World Health Organisation for example recommends that all its member states should consider using ‘fat taxes’ as a measure of increasing prices on unhealthy foods and any ingredients that may lead to high calorie consumption5. In its most basic definition, excise tax is the levy made on the ‘manufacture, sale or consumption of certain (particular) non-essential goods or services’6. Governments use excise taxes as means of: raising revenue; internalising social externalities that lead to increased social costs; and enforcing paternalistic policies. Smeets proposes two approaches that governments can use to enforce excise tax. They are: 1) through a BMI-Tax levied on people whose BMI is beyond a specific limit; and 2) through imposing excise tax on foods that contribute to obesity7. A BMI-tax would make obese people to compensate governments for resources spent in treating diseases whose onset is triggered by their obesity. By so doing, the burden of costs associated with the healthcare extended to obese people would not be paid by other members of the society. Such a tax, according to Smeets8, would reduce the opportunistic behaviour by some people, who over-indulge in unhealthy eating habits knowing that the medical costs of any lifestyle disease that would afflict them because of their eating habits would be offset by the government. While it is true such a policy would encourage people to adopt more healthy eating habits, there is no denying that implementing such a policy would present several challenges to governments. For starters, weighting and determining an entire population’s BMI is a challenging undertaking by itself. Additionally, determining the best way to enforce such a policy would no doubt introduce some treachery from some people who can work to lower their weights through extreme measures such as dieting just some days or weeks before the weighting period. Such people would then go back to their eating habits once the weighting period is over. Marti et al. 9 further observes that medical science is yet to conclusively determine whether obesity is purely a consequence of lifestyles, or a genetic disorder. Such uncertainty would most likely create a scenario where the BMI-tax would raise questions regarding its ethics and fairness. Smeets10 also notes that in some countries like the US, a BMI-tax would have regressive effects low-income households since it has been observed that obesity is more prevalent among the poor people than it is amongst the wealthy. The fat-food tax seems to be the most appropriate way of discouraging the use of fast foods. Specifically, governments can devise policies that target imposing taxes on fast foods based in their fat or sugar content; calorie count; or food type. This proposition is based on the understanding when consumed in large quantities, fatty foods, those with high sugar content, and high-calorie foods are more likely to lead to obesity when compared other regular and healthy foods. Instead of getting into the complexities of counting calories and determining the sugar or fat contents, governments can opt to classify foods into categories based on their calorie count, sugar and fat content, and then impose excise tax based on the likelihood of such foods to induce obesity. For example, based on the calories count and fat content in hamburgers and French fries, a specific government can decide to impose a 45 percent excise tax on all such products of specific weights. The 45 percent excise tax would mean that all products in the defined category register an increased price, and this could possibly discourage less people to purchase the product, or the price increase could reduce the frequency that such people consume the fast foods. Providing an Alternative In order to avoid a situation where a government imposes excise tax on fast foods without providing consumers with healthier alternative food choices, policy makers should consider using the revenues collected from such a tax to offset the cost of other healthier food choices. For example, Smeets11 proposes zero-rating low-fat foods in vending machines located in schools since such a move would encourage more students to choose the healthier option based on the price difference between the low-fat foods and high-fat foods. Policymakers could also consider reducing taxes imposed on fruits, vegetables and other inputs used in preparing healthy meals, and providing alternative revenue by imposing high excise tax on fast foods. As evident from tobacco taxation, the revenue generated from excise imposed on fast foods can also be used for civic education in order to inform the populace about healthy lifestyles12. Governments can also opt to commission fast food restaurants as agents and marketers of healthier foods by providing them with enticing incentives. Such a move is especially significant because ‘[the] unprecedented exposure to energy-dense, heavily advertised, inexpensive, and highly accessible foods’ has been blames for the fast increase of obesity in most societies13 Imposing excise tax on fast foods would directly affect the selling price of such food items thus making less affordable. As Chaloupka et al.14 notes, a 10 percent price increase in fast foods or beverages would most likely lead to an average of 9.5 percent reduced consumption of the same. A higher tax would hence bring out even more responsible eating behaviour. Studies conducted in the US for example revealed that a price increase in sugar sweetened beverages led to an increased consumption of alternative beverages such as low-fat milk, juices, tea and coffee15. Governments that are intent on reducing obesity rates in their respective countries should specifically rely on empirical research findings, which indicate children, teenagers, and people within the low-income brackets are most responsive to any increases in fast foods16. However, for excise tax to have the desired effect on the consumption of fast foods, it is rather notable that the cost of healthier food alternatives would need to be lowered. This is especially important to policy makers because some people (e.g. those within poor households) consume fast foods because they are affordable. Conclusion It is quite clear that obesity is becoming a pandemic that threatens social welfare in most developed countries. Hence, the need for government intervention through excise tax policies should be considered as a means of increasing the cost of such foods and hence reducing their consumption. For such a policy to be effective, policymakers would need to devise an acceptable rationale for taxing the fast foods by balancing the needs and wants of individual consumers against the greater good of the larger society. Additionally, policymakers would need to adopt a systematic approach that would lead to the classification of fast foods into objective categories. For example, fast foods or drinks that have empty calories can receive the highest excise tax, while those that have higher nutritional content should receive relatively lower taxes. Finally, an excise tax policy on fast food is a curative approach to addressing the obesity menace. However, if governments intend to prevent the problem from occurring, other measures such as engaging fast food restaurants to market or advance healthier food choices to their clients as noted elsewhere in this essay should be considered. Governments should also consider conducting civic education in order to inform the masses about the taxes, their rationale, and the need to adopt healthier eating habits. Bibliography Amelia Marti et al., ‘Genes, Lifestyles and Obesity’ (2004) 28 Int J Obes Metab Disord, S29. David Cutler, Edward Glaeser and Jesse Shapiro, ‘Why Have Americans Become More Obese? (2003) 17Journal of Economic Perspectives 93. Frank Chaloupka, Lisa Powell and Jamie Chriqui, ‘Sugar Sweetened Beverage Taxes and Public Health’ Robert Wood Johnson Foundation Research Brief, refer < http://www.rwjf.org/files/research/20090715beveragetaxresearchbrief.pdf>,1. Fred Kuchler and Nicole Ballenger, ‘Societal Costs of Obesity: How Can We Assess When Federal Interventions Will Pay?’ (2002) 25 Food Review 33. Karin Stenberg et al., ‘Responding to the Challenge of Resource Mobilization-Mechanisms for Raising Additional Domestic Resources for Health’ (2010) 13 World Health Report, 19. Linus Powell, Jamie Chriqui, and Frank Chaloupka, ‘Association between State-Level Soda Taxes And Adolescent Body Mass Index’ (2009) 9 Journal of Adolescent Health, 229-257. Michael Grossman, ‘The NBER’s Health Economics Program, (2004) NBER Reporter. Paul Smeets, ‘Following Tobacco and Alcoholics, It Is Time for Tax Fat’ refer < http://arno.unimaas.nl/show.cgi?fid=11425>, 29. Steven Yen et al., ‘Demand for Non-Alcoholic Beverages: The Case of Low-Income Households’ (2004) 20 Agribusiness 309-321. Thomas Wadden, Kelly Brownell, & Gary Foster, ‘Obesity: Responding to the Global Epidemic’ (2002) 70 Journal of Consulting and Clinical Psychology 510-525. World Health Organisation, ‘Obesity and Overweight’ (2011) Fact Sheet no. 311, refer . Read More