There is little Australian evidence regarding the impact of food taxes on dietary behaviours and health outcomes. Internationally, some studies have shown food taxes to affect positive changes in dietary behaviours and potentially influence health outcomes although the consistency and strength of the evidence is limited. There is a need for further research to clarify the impact of a food tax on Australian consumer behaviour, rates of overweight and obesity, and cancer risk, as part of a cost-effective, sustainable, multi-strategy approach.
Low income groups have a greater burden of diet-related chronic disease than people from higher socio-economic levels. A food tax is likely to be regressive for low income households. However the experience with tobacco taxes has been that those on low incomes are more responsive to price increases on tobacco products. Therefore if the same is true for food products, lower income households could potentially benefit more from a food tax. Additionally, incorporating subsidies (e.g. for fresh fruit and vegetables) into a tax design to support those on low incomes may help to combat the impact of a tax on unhealthy foods and may result in higher consumption of healthier foods such as fruit and vegetables.
A small tax on a range of food products or a single category of food that is commonly consumed (e.g. sugar-sweetened beverages) is likely to raise high levels of revenue that could either be used for general revenue, hypothecated for use in health promotion, to off-set the cost of subsidising healthy foods either for the wider population or for those on low incomes, or all of these uses. Public health advocates argue that hypothecation to support health promotion should be part of the policy solution.
Prior to recommendations regarding a food tax, Cancer Council recommends that the following evidence gaps in Australia should be considered:
- Determining the impact of the impost of the GST and removal of wholesale sales taxes on consumption and dietary behaviours.
- Modelling the impact of changes in the price of different foods in Australia on changes in consumption, body mass index (BMI) and cancer risk.
- Identification of the differential economic implications of a food tax for different socio-economic groups within Australia, including how incorporating subsidies could reduce the regressivity of a food tax for some sub-groups.
- Quantifying the revenue implications from a food tax in Australia.
- Examining how a food tax could interact and complement a possible suite of policy measures, and the combination of policies that are likely to be most effective and equitable.
Cancer Council recommends that the federal Depart of Treasury and Finance investigate potential tax options to increase the price of sugar-sweetened beverages that offer no nutritional benefits, with the aim of changing purchasing habits and achieving healthier diets.
See the full position statement:
Food Taxes Position Statement