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Sin taxes may result a WIN-WIN situation under the current economic crisis and they can help to avoid another health crisis.

On the one hand, they can produce additional benefits for national budgets and promote a healthier lifestyle on the other.

Sin taxes are therefore typical examples where financial and public health benefits can go hand in hands.

I read a recent short article about ‘Fat Taxes in Europe’ I would like to argue with. The article of Alberto ALEMANNO has the following main message:

“Should the European Union (EU) institute a “fat tax” on unhealthy foods to prevent obesity? Is it even legal for the EU or its member states do so?

According to Alberto Alemanno, a law professor at HEC Paris, although fat taxes may be legally feasible, European policymakers should address several key policy issues before implementing such taxes.”

What is the main conception of such a tax?

It is quite simple: unhealthy food (such as chips or hamburger containing too much fat) may be subject to an additional tax (called Fat Tax) in order to (1) produce additional financial tax-benefits for the budget and (2) to discourage consumers to eat such food.

(Owner of the photo © Jean-François Lefebvre)

In my opinion the effectiveness of a fat tax is proven from both financial and public health points of view.

Financially, it may result more state revenues to the public budget which is a crucial aspect in time of financial crisis and economic turmoil. That’s a clear WIN.

From a public health point of view, the taxation of unhealthy products may have a discouraging effect for the consumers. The ‘silent killer’ Non-Communicable Diseases (NCDs) are mainly related to unhealthy diets and if the consumption of unhealthy food decreased it would save additional lives through reducing the number of NCDs respectively. That’s obviously another WIN.

That is why I am talking about a WIN-WIN situation.

Two arguments against the fat taxes

Nonetheless, there are counter arguments on the table we have to deal with.

1.) Priority of educational campaigns

The first one is mentioned in the above quoted article: “While noting that it is debatable whether fat taxes actually decrease obesity, Alemanno argues that governments might just as effectively address obesity through educational campaigns.”

Well, the European public health policy is applied as an overall, cross-cutting policy (HIAP Health in All Policy). I can agree to that educational campaigns are important to fight obesity but it doesn’t mean in any way that an appropriate fiscal policy couldn’t apply at the same time, having clear and proven financial and public health benefits. A well tailored educational campaign can be effectively underpinned by the beneficial effects of a fat tax and an educational campaign does not preclude the possibility of a fat tax and vice versa.

2.) Negative effects on the labour market

Another often quoted critic is that such taxes might be bad for the labour market. Well the truth is that such kind of negative effects aren’t proven, yet.

Thus, in the light of the above mentioned wins I can see a clear preference in favour of the fat tax.

Last but one remark, as a piece of information: Denmark was a pioneer to introduce such a tax applied to saturated fat followed by many other countries (France, Hungary). As far as I know, Denmark is considering the withdrawal of this tax which could be a step backward to the wrong direction. The European Public Health Alliance (as a public health NGO) wrote a short, 2 pages open letter to the respective danish ministers responsible for health/finance in order to re-consider their position.
Finally, although we are talking about fat taxes, the same principle apply to alcohol/tobbacco and similar “sin taxes” as well.

Conclusion

I warmly welcome the idea of introducing fat (or SIN) taxes. May I stress the most obvious advantage of them once again: they may result a WIN-WIN situation under the current economic crisis and it can help to avoid another health crisis.

On the one hand, they can produce additional benefits for national budgets and promote a healthier lifestyle on the other.
Sin taxes are therefore typical examples where financial and public health benefits can go hand in hands.

If you have a say in that debate you can easily do it by joining the open and public ongoing debate in the European Affairs LinkedIn networking group. The following persons contributed to the public debate so far (in order of appearance). However the floor is still open for further written contributions.

Mr. Alberto ALEMANNO, Jean Monnet Professor of EU Law, HEC Paris; Editor-in-Chief, European Journal of Risk Regulation.
Patrick LAUREYS, Diplomat at DG European Affairs and Coordination
Patrick MCCUTCHEON, senior policy analyst at European Commission
Zoltan MASSAY-KOSUBEK, EU Policy Officer & Legal Expert in public health / environment / social security. ★ 2011 HU EU presidency veteran (author of this blog entry)
Ankit KHANDELWAL
Erik ZOLCER, Media and Regulatory Affairs Monitoring Intern at EUK Consulting
Per SJOBERG, GM at SEP Belgium SA
– Piero SOAVE, Consultant at Harwood Levitt Consulting

For those who are more interested in that question are more than welcome to join the 2nd HEC Paris Workshop on Regulation that will be devoted to the challenges of regulating lifestyle risk choices in the EU. The workshop will take place on September 20-21, 2012 at HEC Paris main campus organised mainly by Mr. Alberto Alemanno, Jean Monnet Professor of EU Law, HEC Paris; Editor-in-Chief, European Journal of Risk Regulation. The draft program is now available and registration is open.

I remain at your disposal.

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Zoltán MASSAY-KOSUBEK

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