Denmark's 'Fat tax' has been repealed but doctors are pushing for a similar tax in the UK backed up with supporting measures.
For doctors in the UK the big problem is fizzy drinks, which are basically water and sugar. They want a tax which will arise prices by 20%.
Of course the PED of these drinks might be quite inelastic, but with so many potential substitutes, from juice to water, we might be pleasantly surprised by the effectiveness of such a tax. (However you can see the dentists getting ready to warn us against the effect of acid in fruit juice.)
The problem of fatty and high calorie foods is that they are 'imperfect information goods' and impose significant costs on the consumer and negative externalities on society who must treat their weight related diseases.
So using a price rise alone isn't enough. It is necessary to improve knowledge and directly intervene, such as banning advertising of unhealthy foods and closing take-aways near schools.
The problem of obesity is the 'new smoking'. The 1970's saw us begin to tackle the evils of smoking, but today the threat to peoples health from eating too much is just as serious.
It will take a broad range of measures to solve this. Some will cause a movement along the demand curve, but most will attempt to move the demand curve to the left.
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As the BBC article states, the UK is one of the most obese nations in the world with about a quarter of adults classed as obese and this figure is predicted to double by 2050. This is a significant problem that needs to be dealt with. If the UK were to introduce a tax that increased the price of fizzy drinks by 20% then theoretically this should shift demand left as less people will buy fizzy drinks as there are many cheaper substitute goods. As the article states there is a chance that fizzy drinks are inelastic as many younger children rely on them and hence they will respond less than proportionately to a change in price. Alternatively, the option of many cheaper substitutes may cause a more elastic response and as the price increases, the demand will fall. This seems more likely to happen as many parents are already aware that there are problems caused by fizzy drinks and increasing price may make them rethink spending a portion of their real income on something that is unhealthy. The national institute of health found research to suggest that the consumption of fizzy drinks lead to increased chances of developing hyperactivity and mental distress. If the government were to run campaigns making the UK population aware of the health implications of fizzy drinks, then hopefully this would tribute to decreasing demand for them. However, fizzy drinks are not the only cause of obesity and in order for the Government scheme to work; other factors that contribute to obesity would need to be tackled. If junk food adverts were banned from being shown on T.V until after the watershed, this would help prevent children from being surrounded by fast food. In addition to this, if there were fewer fast food outlets near schools then schools would be more successful at influencing children to follow a healthy eating campaign. If the Government focused on this generation of children then as they grow up they would continue to influence their children and there would be more chance of reducing the obesity rate in the UK and prevent the country’s spiralling obesity crisis from becoming unresolvable.
ReplyDeleteIt is evident that obesity is a big problem in the UK and is something that the government needs to tackle. Through the proposed tax they would hope to reduce demand by increasing price, in correlation with the law of demand. However, the effectiveness of this measure is hard to calculate. It is likely that there is a very inelastic demand for fizzy drinks and thus a 20% rise in price would make a relatively minimal impact, despite the number of alternatives available.
ReplyDeleteAn alternative to this proposed tax however would be to further educate those of the younger so that they become more aware of the health effects of fizzy drinks and indeed unhealthy food and beverages in general. Of course, this tax might be a useful way of funding such a scheme.
-James Woodcock
Obesity in Britain is becoming a significant problem, which needs to be dealt with as soon as possible. Currently, the majority of unhealthy goods, such as the sugary drinks, but also general high fat contents foods are significantly cheaper than fresh produce, like fruit and vegetables; therefore many families, conscious of the credit crunch will be trying to keep their food bills at a lower cost. By introducing a 'fat tax' onto sugary drinks, but also foods with high fat contents, like fast food restaurants, it should decrease the demand, because of cheaper and hopefully healthier options. I don't believe though, adding a fat tax will completely get rid of the popularity and demand for fast food though. Therefore, advertising of unhealthy products should be banned, and adults, and children, from a very young age, should be educated on healthy eating so they are aware of the bad effects unhealthy food and fizzy drinks can do to you.
ReplyDeleteIn addition, the consumption of fizzy drinks and unhealthy food is only ONE factor which contributes to obesity,other factors include exercising and mental health. Perhaps the government should also focus on ensuring children understand the need for exercise, and advertise and promote this in schools and on television, to get children surrounded by posittive ways of living a healthy lifestyle. They would then be able to pass it on to their children, and so forth.