A TAXING ISSUE? The Tax System and Healthier Lifestyles in Wales AUThorS Adam Jones, Dr Sumina Azam & Prof. Mark A. Bellis Policy and International Health, WHO Collaborating Centre on Investment for Health & Well-being (WHO CC), Public Health Wales. 2 SUGGESTED CITATIoN Jones, A, Azam, S & Bellis , MA (2019). A Taxing Issue? The Tax System and Healthier Lifestyles in Wales. Cardiff, Public Health Wales NHS Trust. ACKNoWLEDGEMENTS The authors would like to thank the following for their help and assistance during the production of this report (in alphabetical order, by forename). Any errors remain the authors: Annalisa Belloni, Public Health England Dr Kirsty Little, Public Health Wales Ashley Gould, Public Health Wales Laura Fox, Welsh Government Irfon rees, Welsh Government Dr Louisa Petchey, Public Health Wales Isabel Puscas, Public Health Wales Louise Woodfine, Public Health Wales Jane Landon, The Health Foundation Malcolm Ward, Public Health Wales Janine hale, Welsh Government Dr Mark Griffiths, Public Health Wales Jyoti Atri, Public Health Wales Dr Mark hellowell, University of Edinburgh Dr Katherine Smith, University of Edinburgh rhys Gibbon, Public Health Wales ISBN 978-1-78986-057-3 © 2019 Public Health Wales NHS Trust. Material contained in this document may be reproduced under the terms of the Open Government Licence (OGL) www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ provided it is done so accurately and is not used in a misleading context. Acknowledgement to Public Health Wales NHS Trust to be stated. Copyright in the typographical arrangement, design and layout belongs to Public Health Wales NHS Trust. LIST oF ABBrEVIATIoNS 3 CVD Cardiovascular disease DALYs Disability-adjusted life years EASr European age-standardised rate GhG Greenhouse Gas IhD Ischaemic heart disease NCDs Non-communicable diseases NDNS rP National Diet and Nutrition Survey Rolling Programme PhPT Public Health Product Tax QALYs Quality Adjusted Life Years SACN Scientific Advisory Committee on Nutrition SES Socio-economic Status SFA Saturated fatty acids SSB Sugar-sweetened beverages TFA Trans fatty acids UN SDGs United Nations Sustainable Development Goals VAT Value Added Tax Who World Health Organization WrA Welsh Revenue Authority YLL Years of life lost CoNTENTS 4 EXECUTIVE SUMMArY 5 SECTION 01 INTroDUCTIoN 8 SECTION 02 WhY CoNSIDEr TAXATIoN? Brief Lessons for Policy Development 14 SECTION 03 ABoUT TAXATIoN: Key terminology and concepts 20 SECTION 04 TAXATIoN oPPorTUNITIES BY ToPIC 23 Fat 24 Salt 40 Sugar (non-Beverage) 46 Red and Processed Meat 51 SECTION 05 INCENTIVISATIoN ThroUGh TAXATIoN 56 SECTION 06 CoNCLUSIoNS AND rECoMMENDATIoNS 58 rEFErENCES 62 APPENDIX 1: Search Methodology 73 Fat 74 Salt 74 Sugar (non-Beverage) 75 Red and Processed Meat 75 EXECUTIVE SUMMArY This report has two main aims: To increase knowledge and To provide Welsh policy makers understanding of the range of with current health evidence taxation options available to related to these options, detailing promote health and influence why fiscal measures are a 1change in unhealthy behaviours. 2mechanism for improving health. 5 rEMIT AND SCoPE The report focuses on contemporary population health concerns related to diets where taxation has been considered or implemented elsewhere, and/or is a viable innovation within the Welsh context. Excluded from the scope of this report are topic areas where taxation and other fiscal policy approaches are already in place by UK Government (for example, on alcohol and tobacco) and environmental-related taxation. Novel fiscal approaches to addressing the impacts of health-harming commodities have had positive outcomes: • At the immediate outset of the Hungarian • The introduction of a tax in Mexico similarly Public Health Product Tax (PHPT), the demonstrated changes in purchasing consumption of products within the scope of behaviour. the tax did not change significantly, and Comparing purchases prior to, and over, increased in the case of pre-packaged sweets. the first year of the tax, researchers found With time, since the introduction of the tax in a reduction of -25g per capita per month of 2011, the policy measures introduced in purchases of taxed foods in 2014. Hungary have resulted in successes such as: Stratified by socio-economic status (SES), reduced consumption of the products lower SES households purchased on party to the tax, for example pre-packaged average 10.2% fewer taxed foods than sweets and salty snacks, with greater expected, with medium SES households change seen amongst overweight and purchasing 5.8% fewer taxed foods than obese adults; expected. the reduction or removal of particular Purchasing of cereal-based sweets showed unhealthy ingredients in food products; a decline in purchase of 5.2% beyond the consumers substituting taxed products for expected decline following the healthier options, with fresh fruit and introduction of the tax. Purchases of salty vegetables acting as substitutes in 82-86% snacks showed the biggest decline (-6.3% of cases. Some consumers resorted to ‘beyond expected’). substituting with products such as home- After two years, a reduction in the volume made sweets or home-made salty snacks; of taxed food purchases (1607g, per Higher prices were cited as the main capita, per month, compared to 1798g reason for changes in consumption of salty prior to the tax) were also observed. snacks by 81% of people in 2012, and by The unhealthiest group (those who 56% in 2014. purchased more of the taxed products, and less of untaxed products – purchasing nearly 40% of taxed products) showed the largest relative decline in their purchases of taxed foods (-12.3%) • Fiscal policies aimed at reducing consumption a range of public health matters, over 8 in 10 of some health-harming commodities are (82%) agreed that healthy foods should cost a relatively novel. As such, evidence on their bit less and unhealthy foods a bit more – only impact – on health, on consumption and on 6% disagreed. the wider economy – is still emerging. • In relation to dietary-related taxation and Nevertheless, the long history of taxation on subsidies, the balance of evidence supports alcohol and tobacco has demonstrated clear Niebylski et al.’s assertion that ‘maximum impact on consumption levels and health success [is] achieved when food outcomes, indicating that fiscal policies have taxes/subsidies are at least 10-15% and used potential for changing behaviour. We cannot, together.’ The evaluation of the Hungarian however, assume that the observed impacts PHPT recommended that, as a next step, on one product group will be directly consideration should also be given to 6 transferable to other product groups. introducing price subsidies for healthy food products, such as fruits and vegetables. Taxation alone is unlikely to be a solution in itself to public health concerns – a range of It is important to learn from the lessons of interventions need to be in place. policy development and implementation to date if policy-makers are to consider introducing a new tax aimed at improving health. NoUrIShING stands for: • Nutrition label standards and regulations on • If taxing specific products or ingredients, the use of claims and implied claims on food policy makers should engage with experts on • offer healthy food and set standards in public the topic prior to developing the policy, to institutions and other specific settings ensure that the right • Use economic tools to address food nutrients/ingredients/products are targeted affordability and purchase incentives by the proposed tax. • restrict food advertising and other forms of • Consideration of the absolute amount that commercial promotion those with lower income would pay after the • Improve nutritional quality of the whole food introduction of a tax is essential. It is supply important to note that the World Health • Set incentives and rules to create a healthy Organization considers that the potential retail and food service environment health gains from food taxes ‘may be • harness supply chain and actions across progressive and contribute to reducing health sectors to ensure coherence with health inequalities’ and cites evidence which • Inform people about food and nutrition indicates that ‘higher price sensitivity among through public awareness low socioeconomic groups means that they • Nutrition advice and counselling in healthcare may be more responsive to the tax and more settings likely to reduce their consumption as a result.’ • Give nutrition education and skills. • Any new tax should be introduced with a mid – to long-term commitment to keep it in place, so that the impact of the tax can be • In the Hungarian example, the product tax properly evaluated. Evaluation should be was complemented by a strengthened embedded from the start, with sufficient regulatory framework, which, for example, resource allocated to undertake the prohibited the food industry from releasing a evaluation effectively. food product containing more than 2% of • If considering the introduction of a new tax, trans fats within its total fat content. Policy efforts to explore any unintended makers should look to the NOURISHING consequences must be undertaken in the early framework for examples of a broad range of planning stages. This should include balanced policy options, ranging from regulation to consideration of the potential impacts outside information campaigns. Taxation of the health sector, for example on industry, interventions should be supported with employment, the wider economy, and other subsidies for healthier options – this would relevant aspects of public life. As such, we help to negate any regressive effects of strongly recommend a Health Impact taxation on those of a lower SES, and guide Assessment approach from the outset. consumers towards healthier consumption. This is particularly pertinent in relation to food taxes. In the Stay Well in Wales survey, which asked the Welsh population for their views on WhAT Do WE In most countries, taxes linked to health-harming commodities have been introduced with the aim of influencing specific choices people make, in KNoW ABoUT order to promote healthy behaviours and reduce any detrimental impacts TAXATIoN For on health.