Sunday, October 9, 2011


Soft drinks containing only sugar and nothing else that can be considered as nutrients are often referred to as Soda and high consumption of these beverages has been implicated in diseases like obesity and other health disorders. Also on the dock is HFCS (high fructose corn syrup) which is the most widely used sweetener in such beverages and HFCS is being blamed for its fat-accumulating role in human beings though with shaky evidence. Some countries have already taxed these drinks higher to make them costlier and reduce consumption. Many countries are considering to do so after a consensus had emerged at the recent UN meeting regarding the desirability such fiscal policies. Now comes the news that Denmark is imposing a "fat tax" that hopefully curtail consumption of high fat containing foods. It will be interesting to see how this experiment will work out in reversing the current trend of high consumption of such foods.

"The tax -- 16 Danish kroner per kilogram of saturated fat in a food – works out to about $6.27 per pound of saturated fat. It hits all foods with a saturated fat content above 2.3 percent. Danes reportedly began hoarding butter and other fatty products before the new regulation kicked in. Denmark's tax is the first of its kind in other ways. "This is a major development for two reasons: It's an entire country, and they've taken on a particular part of the food supply," says Kelly Brownell, director of Yale's Rudd Center on Food Policy, who is widely credited with introducing the idea of a soda tax in the 1990s. The Danish government implemented the tax because it wanted Danes, who lag behind European life expectancy numbers, to get healthier. Will they? The research on "fat taxes" is sparse, but there's good reason to be skeptical about the potential public health gains. One thing we do know about food taxes is that they have to be really high to change behavior. Brownell and Tom Frieden, now director of the Centers for Disease Control and Prevention, wrote in a 2009 New England Journal of Medicine article that the 5 percent taxes on unhealthy foods that states tend to pass just don't cut it. Brownell's research has found it takes a 1-cent-per-ounce tax to change behavior; anything lower, will do great at bringing in revenue but likely won't lower soda consumption".

Though marketing pundits aver that higher the cost of a product lower will be the demand for a particular product, there is no unanimity as to how much higher should the price be to cause a definite decline in consumption. This is where in-depth studies are required to understand the consumer behavior and only such clear understanding will enable policy makers to evolve tax guidelines that can make an impact. Danish law makers have clearly targeted the saturated fats which are supposed to cause maximum damage but what about foods that contain fats with short chain fatty acids, not considered harmful? How can one treat saturated long chain fatty acids like stearic acid same as short chain acids like lauric acid which has many beneficial effects on human body? Probably there must be a cut of level and only fats containing saturated acids with chain length more than 14 carbons should come under the purview of differential taxation regime.


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