Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

A “Sin Tax” on Junk Food?

Posted by butalidnl on 14 January 2011

A tax on junk food – this is not as crazy as it sounds. In the first place, the government should tax activities that it wants to discourage, in the form of a “sin tax”. And junk food is not a “basic necessity”; people could live well even if they don’t eat any junk food at all. A tax on junk food should help to discourage people from eating junk food. In the beginning, it will not hinder people at all, since the tax won’t be that high; but it will be a good start anyway towards getting people to eat better.

How should we go about having such a tax? Well, I think the tax should be done quite simply. Tax the manufacturers and importers of junk food. Don’t tax the retail outlets, or the kinds of “junk food” that are too small scale.  And most importantly, it should be “budget neutral” (i.e. have a zero net effect on the tax burden of the average citizen).

Let’s say that the government imposes a 20% tax on junk food, to be collected from the manufacturers. This will translate to 5% or less increase in the consumer price. No real suffering there. And let us then say that in order to balance the effect on people’s budgets, the VAT will be reduced by 0.5% – this should balance, since people would consume at least 10 times more in terms of “non junk food” than in junk food (i.e. transportation, meals, phone and electricity bills, etc.) Of course, the government should compute the balance well, to make sure that the net effect will indeed be zero.

What should be considered “junk food”? Well, products such as softdrinks, chips and other finger foods in plastic or aluminum wrappers, chocolates, cookies (for sale in groceries), ice cream, candies, among other things. It should not include fast food (even though some will consider these as “junk”) products, since this is retail, and also difficult to implement.  Products with a certain level of sugar in them should also be taxed; but this should exclude jams and jellies.  For implementation purposes, there would be some “strange” cases; e.g. street foods, no matter how unhealthy, would not be taxed; or cookies and cakes sold by bakeries will not be taxed, while it would be taxed if sold in groceries.  There is a need to keep the tax simple, so only manufacturers and importers will be taxed.

This tax on junk food should increase the level of government income, without decreasing the overall buying power of people. It will be relatively easy to collect the tax; thus, tax compliance is easy to achieve. And, the best part of all, is that people will be discouraged (even to a small degree) from eating junk food.

One Response to “A “Sin Tax” on Junk Food?”

  1. healthy eating, diet, healthy foods, unhealthy foods, eat healthy…

    […]A “Sin Tax” on Junk Food? « Carlo's Think Pieces[…]…

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