Political costs of introducing a new tax – people dislike the idea of ‘nanny-state’ discouraging certain behaviours.Obese people have lower life expectancy and so save government pension costs and health care costs in old age. Costs of obesity may be over-estimated.Often people on low-incomes spend a high % of their income on ‘unhealthy foods’. Administration costs in collecting tax from unhealthy foods.It includes issues such as the size of portions, levels of exercise and genetic factors. Obesity is caused by more factors than just over-consumption of ‘high fat’ high sugar foods. Many foods could contribute to obesity if consumed in sufficient quantities. Which foods? Difficult to know which foods deserve a fat tax.Similar taxes such as cigarette taxes have been widely accepted and contributed to long-term fall in cigarette smoking rates.Some may say a fat tax is regressive (takes a higher % of income from low-income families), but if other regressive taxes are reduced the overall impact on equality should be unchanged. Alternatively, the money raised from ‘fat tax’ could be used to spend treating health costs of obesity. Therefore, a fat tax could be revenue-neutral (no overall increase in tax revenue). They could use this revenue to offset other taxes – such as decrease the basic rate of VAT. Through increasing tax on fatty foods, the government could raise substantial sums of money. made for those in the plus-sized community and those who are not. Fast food outlets would have an incentive to provide a wider range of foods. The 'fat tax' is a difference in price between items clothing, bikes, furniture, etc. A fat tax would also encourage producers to supply foods lower in fat and sugar. A tax on unhealthy foods would encourage people to choose healthier foods which lead to improved health and would help reduce related disease. (see theory of tax on negative externality) Making people pay social cost would achieve a more efficient allocation of resources. Increasing the cost of unhealthy foods, would reduce demand and play a role in reducing obesity levels. A tax on fatty foods would make people pay the social cost of these foods. Those who are obese are 25% less likely to be in employment, leading to lower tax revenue and higher welfare spending on benefits.
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