Sugar Tax Would Help New Zealand, Fat Tax Might Not

November 25, 2015 Taxation in New Zealand

WELLINGTON – A tax on sugary drinks will reduce obesity in New Zealand, but taxing fatty foods and dropping taxes on fruits and vegetables may not have the same effect.

On November 19th the Treasury of New Zealand made public a report prepared in February this year, with analysis of several tax proposals aimed at reducing the rates of obesity in the country.

The report contained analysis of the potential impact of introduction of a tax on the sale of sugary drinks, the introduction of a tax on foods high in saturated fats, and the effects of dropping GST on fresh fruits and vegetables.

The Treasury concluded that a tax on the sale of sugar sweetened drinks could have positive results in the government’s efforts to cut down the effects and occurrence of obesity.

It was noted that while the tax is criticized for having a disproportionately heave effect on low-income earners, however, low-income earners have a higher instance of obesity, and could feel a greater positive effect from the tax.

Further, it was noted that the sugar tax has the highest shown link to obesity, while a tax on saturated fats may not reduce obesity, and is at the same time difficult to implement.

Similarly, it was claimed that removing GST of 15 percent on fruits and vegetables may lead to overall improvements to health, but not necessarily obesity, but carries with it difficulties with implementation and administration.

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