Fat tax could swell exchequer coffers by over €180m a year
LEADING ECONOMISTS were told at the weekend about a study that details a separate tax for saturated fat, added sugar and salt, and concludes that a levy on all three could generate €188 million a year for the exchequer.
Authors Maria Murray of Trinity College Dublin and Micheál Collins of the Nevin Economic Research Institute told the gathering including economists attached to government departments that the direct effect on consumers would be quite small. But it could lead suppliers to reduce fat and added sugar and salt in products.
The cash generated could be used for health promotion campaigns. The economists’ warning to Government was: “There will be no effect other than revenue unless you spend the revenue on generating change.”
The tax on saturated fat would cost consumers an average of 93 cent a week, while added sugar would add €1.10 a week to weekly shopping costs. And the levy for added salt would be a humble 15 cent a week.
A tax on saturated fat alone could generate €79.91 million, while taxing added sugar could be worth up to €95.1 million with a salt tax yielding €13.08 million. For individual consumers it would mean a 5 cent increase on a pack of butter, 3 cent on a half kilo of cheddar cheese, 3 cent on a chocolate bar and 5 cent on a two-litre bottle of cola.
Such a tax would follow the example already set by New York state, which introduced a levy on saturated fat, Ms Murray told the Dublin Economics Workshop conference in Galway. Denmark last year imposed a tax on products with more than 2.3 per cent saturated fat. Hungary has introduced a salt levy, she said.
Ibec’s Food and Drink Industry Ireland group last week spoke out against a fat tax when it met the Oireachtas health committee. The group said it was a simplistic solution that would have little impact on diet.
However, Ms Murray said Minister for Health Dr James Reilly had signalled his interest in introducing such a tax in December’s budget, since 61 per cent of Irish adults are overweight or obese and 20 per cent of children likewise. Some 2,000 premature deaths occur annually, costing the State €4 billion a year. Figures from 2003 show in-patient hospital costs for obesity-related illnesses were €30 million.
It would not be a complicated tax, Mr Collins assured a Department of the Taoiseach representative who expressed concern about the burden applying the levy would impose on business: “Either you have saturated fat or you don’t. If you do it is taxed at one level or another level.”