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The GST is a massive fat tax
IPA REVIEW ARTICLE
Many public health activists claim that a tax on fatty food is necessary to tackle obesity.
The critics of this fat tax idea point to a number of studies revealing the limitations of such a scheme. A 2005 US study of a 10 per cent fat tax on dairy products found that it would not lead to a significant reduction in fat consumption. A 2006 study presented at an agricultural economics conference in Australia found that fat taxes to finance nutritional education program may actually increase fat consumption.
However, those supportive of an evidence based policy stance usually want more than just the recitation of academic studies modelling the hypothetical impact of policy change. They are after information about the effects of policies implemented in real life.
Most governments around the world have been sensible enough (so far!) to avoid such a discriminatory, onerous tax regime. Except for Australia, that is.
In order to secure passage for its tax reforms, fresh foods were left out of the GST net. With fresh foods given a zero tax rate, yet with junk foods feeling the full 10 per cent impost, the GST effectively represents a fat tax of monster proportions.
So, what is the evidence on the effect of the GST on the consumption of junk food? ABS data on turnover in the takeaway food retailing industry shows that, undeterred by the implicit fat tax, people have kept on buying chips, hamburgers and other unhealthy foods they enjoy. Since the GST's introduction, turnover has increased by 63 per cent.
Pro-tax public health advocates face almost ten years of evidence of about how ineffective a fat tax is. Once they see the data for themselves, will they change their minds and abandon their fat tax folly?