Sunday, 5 January 2014

If We Must Tax Fatness, Tax Fat People In Hospital, Not At The Supermarket

Christmas is over now – and like almost everyone else over the festive season, I’m sure you’ve indulged excessively in food and drink that’s bad for you - I know I have.

The current government is often banging on about fat people, and how it wants them slimmer because of all the extra strain they place on the NHS. Higher tax on junk food is one of David Cameron and George Osborne's favourite methods (as well as extra tax on alcohol).

To me it's obvious where they are going wrong - they are only looking at costs and ignoring benefits.  To see why eating unhealthy food and drinking alcohol obviously confers plenty of benefits in the form of pleasure, consider the disadvantages of them - they cost money, but they also cost you some of your health, your life expectancy, some energy, your figure, and they give you extra chins. But despite those costs being incurred, people still freely choose to indulge in them - and the reason is obvious; the pleasures of consumption outweigh (pun intended) all those costs.

So long as people have the freedom to make their own choices, then those people in the UK who are fat are those who have decided the pleasures outweigh the negatives. Alas, things aren't quite so straightforward. If the government does not tax obesity or subsidise it, then the number of fat people in the UK would be the right number (that is, it would be all those whose decisions were based solely on a cost-benefit analysis). Sadly, the government makes the mistake of doing both - it taxes people in the supermarket and it subsidises them in the hospital.

Because the NHS is free at the point of delivery (thanks to National Insurance revenue), obese people do not pay the actual value of their obesity - the cost of the NHS is diffused across the spectrum of all people, the heavy and the light. In fact, given that healthier people tend to be richer, the cost is actually disproportionately lopsided on the side of healthy people. In short, to a large extent (again, pun intended) those in good health are subsidising those who pig out on junk food.  

To compound the frustration, tax at the supermarket (increased VAT on junk foods) doesn't just penalise fat and unhealthy people, it penalises everyone - so that doesn't make things any fairer, as many healthy people enjoy the occasional bar of chocolate and a bag of crisps but pay extra for it due to a fat tax, aimed not at them, but at those they are subsidising in the hospital.

A much fairer way for David Cameron and George Osborne to tax obesity would be to implement the charge at the level of NHS protocols, whereby the State still pays for everyone's basic healthcare out of National Insurance revenue - but when metabolic disorders like type-2 diabetes occur due to over-eating or excessive junk food (or when liver failure occurs because of excessive alcohol consumption), that cost is then borne as a surcharge cost by the person who indulged excessively.

This has a benefit on top of the benefit of getting the obese people to fund their own indulgences - it gives those who value money over indulgence the incentive to cut down, and it also means that anyone who ends up obese has done so because they considered the newly implemented financial costs (as well as the other costs) to be worth it for the pleasures of their consumption. That really would result in a nation of happy eaters - fat and thin!

* Photo courtesy of LoveHR