A fat tax to encourage consumers to switch away from fats, sugar and processed foods
- The attribute of the ice-cream.
- Data to predict the potential effects of a tax on the consumption of ice-cream and vegetables.
People are obviously getting more and more fat. This fact cannot be denied. That is why, to curb this phenomenon, Kelly Brownell launched the idea of applying a fat tax on unhealthy food, in his article published in the New York Times in 1994. Such a tax could encourage people to buy less unhealthy food. From then on, the point is to analyze the tax features and its effects on general consumption. First, I will focus on the way of applying a new tax on fat products, studying the two goods market, vegetables and ice-cream, presented here. Then I will try to explain what effects the tax could generate on the consumption of these two goods. By doing so, it will help me to show that a fat tax could be a good way to prevent people from buying unhealthy food.
[...] Brownell has proposed two options: either a big tax, between and in order to discourage people from buying junk food, or a smaller one which could help to raise government's revenue. Furthermore, some economists have also proposed to apply the Value Added Tax of 17,5% on fat products. On the other hand, the tax could be applied either on the producer or on the consumer. This is a tricky decision, because if the tax is applied on the producer, hence it could absorb a part of the tax by reducing the price sell its extra supply-, would undermine the efficiency of a fat tax. [...]
[...] On the other hand, ice-cream can also be a necessity when the income-elasticity is positive: in this case, the demand for ice-cream must rise in a smaller proportion of people's income, which is to say between 0 and 1. This is also called a normal good. But considering these two cases, does it mean that ice-cream is a necessity? Assuming that richer people spend a smaller proportion of their income on ice-cream than poorer people, it first means that their budget share devoted to ice-cream will fall. [...]