Taxes Can Improve Consumer Health

December 14, 2012 International Tax CooperationTaxation in New Zealand

Healthy FoodsAUCKLAND – Imposing taxes on sugary drinks and offering subsides on the purchase of fruits could lead to an improvement in the health of consumers across the world, especially amongst low income individuals.  

A new study released earlier this week by researchers from the University of Otago and the University of Auckland in New Zealand shows that raising taxes on un-healthy foods and providing subsidies on nutritious products would decrease consumption of saturated fats, increase the intake of nutrients from fruits and vegetables, and decrease the effects and spread of non-communicable diseases such as diabetes.

The report, which was based on data collected from 32 high income countries, showed that increasing prices on high-sugar products would have a overwhelmingly positive effect on the health of citizens, with a 10 percent increase in price leading to a 24 percent decrease in consumption.

It was estimated that a 1 percent increase to the price of foods high in saturated fats would lead to a 0.02 percent drop in the number of calories consumed from fatty foods.

Any extra revenue raised from the hiked taxes could be used to provide subsidies for fresh fruits and vegetables, with the study suggesting that a 10 percent decrease to the price of these healthier foods would result in an 8 percent rise in consumption levels.

The study also showed that increasing prices of unhealthy items and decreasing prices of fruits and vegetables would have the strongest effect on low income individuals, as they are the most price sensitive when it comes to food purchases.

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