Tuesday

19th Jun 2018

Opinion

The 'nanny state' in consumer health needs to go

  • A Danish 'fat tax' was repealed after just 15 months

The Irish government recently decided to levy a so-called 'soda tax' on sugary drinks. Officials are introducing this measure as a way of tackling obesity, which many people consider as having run rampant in Europe for a while now.

'54,000 obese school children' was the slogan by which Irish politicians lobbied for the new tax. Quite evidently, the implication is all those who disagree with the measure must not be concerned about the children - despite the possibility that child obesity might not be stopped by an increase in the price of a Coke, but that it has far-reaching roots that need to be sorted out first.

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The Irish measure is aligned with the recent French increase on their existing tax on soda. The then president Nicolas Sarkozy had introduced the measure, which then continued to be exploited for revenue increases. The initial tax constituted €7.53 on 100 litres of soda, or 2.51 cents for a can of 33 centilitres.

One might suggest that this is steeped in irony, considering that while part of the European Union's common agricultural policy, France is also subsidising sugar. Being asked to pay twice, once for the subsidisation of sugar, and then its consumption, is probably hard to swallow for the French consumer.

Just looking at the Danish 'fat tax' will teach us a lot about the disastrous nature of these so-called 'sin taxes'. Denmark introduced a special fat tax on consumption goods, only to repeal the bill (with the same majority) some 15 months later.

Not only was the tax an additional burden on people with low incomes, it also incentivised consumers to downgrade to cheaper products in the supermarket (while maintaining their consumption of fats), leading to no impact on health and minor impact on consumption overall.

However, the question really isn't on sin taxes at all anymore. We can look at policy failures on a case-by-case basis as much as we like, but we won't put a halt to the 'nanny state' if we don't address the underlying principle of its premise.

The premise of this patronising politics is this: that the consumer is basically too inept to make decisions about his or her own life. Blinded by the irrationality of his own mind and instinct-lead urges, it can only be the benevolence of modern-day public policy that can lift him out of his distress. That, at least, seems to be the assumption of today's regulators.

The truth, however, is of a very different kind. Despite not being particularly vocal about their opposition to sin taxes, consumers speak clearly when it comes to their market decisions. In the case of the Danish fat tax, we've seen consumers downgrade their quality standards; something that is likely to happen in the case of soda as well.

An even more far-reaching example of market decisions in spite of sin taxes is tobacco, where increasing taxes have inspired e-cigarettes, the significant comeback of rolling tobacco and has simultaneously propped up a black market which makes every fifth cigarette in France one which originates from illicit trade. The total number of smokers, however, has only marginally decreased.

People are sinners...

People want to smoke, eat fatty foods and drink soda, and politicians need to start to come to grips with it. These are all products we should consume in moderation and with transparent information about its health concerns, but we should stop criticising the innate desire to have them in the first place.

We have created a public policy monster that lurks out from the backroom once we eye the cookie jar, when we should actually be completely unapologetic about the fact that we like candy, we lust after soda and that we love chocolate.

We may very well debate an EU directive on soda taxation by 2020, but considering the ineffectiveness of the measure, it is all just political virtue-signalling echoing into the void of well-intentioned, yet ill-advised laws.

Let us let consumers choose for themselves instead.

Bill Wirtz is a policy analyst for the Consumer Choice Center, a lobby group in Brussels

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