Impact of fat tax on Australian economy

Impact of fat tax on Australian economy

Australia is now considered as one of the most obese countries in the world, with 63% of Australians being either obese or overweight . To counteract this, there has been speculation over whether to introduce a fat tax. This tax would specifically target foods high in fats and sugars, such as; soft drinks and deep fried takeaways. The logic behind such a tax is that an increase in price would lead to decrease of demand similar to that of the alcohol and cigarette taxes respectively, in order to improve our country’s health as a whole.

The advantages and disadvantages of the at tax can potentially help foresee the effect on the Australian economy. The effectiveness and consequences are also aided by the views gained from the implementation off fat tax by the Danes in 2011. With Australia’s current federal debt at two hundred and forty seven billion dollars , the added burden of twenty one billion dollars a year of debt from diseases associated with unhealthy foods being decreased would be a welcomed relief to the federal government.

This coupled with the influx of tax revenue from a successfully implemented fat tax would lead to a feet sum of tax payer money of which the government can use. The advantages of this to the Australian economy would be immense as the money would hopefully go to funding the agricultural section. Australia’s agriculture section, in accordance with Australian Bureau of Statistics contributed $48. 7 billion dollars towards Australia’s total gross domestic product (GAP) . The added government stimulus from the fat tax could contribute greatly to increasing the GAP.

The stimulus would help conquer the water shortages farmers face every year, as well as increasing efficiency enabling the arches of modern agriculture capital, hereby increasing economic efficiency. This increase in agricultural revenue could have a positive effect on Jobs as farming becomes a more financially appealing career choice. However, consequences of this could be a decrease in Jobs elsewhere such as in fast food restaurants as profits being to decrease from the rise of prices due to the fat tax.

This could also affect Australia’s other economic sections such as the business or education section as funding may be retracted from them as the Government focuses primarily on the lath section. Economic efficiency would also be at risk as the increase of resources would require a higher threshold of transportation either across the country and worldwide. This may cause a bottleneck effect and wastage of resources may occur, such as trains full of fresh produce waiting weeks to be emptied because Australian ports simply do not have to capacity to fill so many ships at a time.

To further question the effectiveness of the fat tax, examples can be sourced from the implementation of a similar tax in Denmark. In October 2011 Denmark introduced a ax on items with over 2. 3% saturated fat . It was then quickly abolished in November 2012 as it didn’t change Danish eating habits. It had a negative impact on the Danish economy as “48% of Danes were traveling across the borders to Sweden and Germany in order to purchase Junk food”3.

Butchers also caught the full blow of the tax opposed to large supermarket chains as “supermarkets could keep meat prices down by spreading the tax across other goods, but small butchers sold only meat. This meant higher prices and lower sales. “3. Additionally, the Australian government Lou also seek Nell canceling winter or not to Implement tents tax Trot ten success of both the tobacco tax and alcohols tax. In terms of effectiveness, according to Sally M Dunlop of the Medical Journal of Australia, the tobacco tax “… As been identified as the most effective single intervention to reduce demand for tobacco” . Similarly, the tax on alcohol, more specifically alcohols, was equally efficient in the decrease of demand for the certain product. As of March 8th 2009 the sale of alcohols dropped by 29% according to Julian Drape of the Age; “This independent data is irrefutable ND unbiased, and demonstrates a big loss in spirits sales for the liquor industry”. This provides some support towards to levying of the fat tax as there have been past examples of taxes being effective in reducing the demand for unhealthy products.

Jane Martin, the Executive manager of Obesity Policy Coalition, states that “a combo of a tax and social marketing are the most effective way of the government combating obesity’, but perhaps this is not quite ethical of the government to decide what consumers eat and what they spend money on. It is a intrusion on consumers right of archiving. Furthermore, the price increase would not only effect the overweight and obese, but also healthy individuals who partake in the consumption of Junk food.

Instead of punishing the overweight, the government could reward the healthy with things such as “tax breaks on gym memberships” . Moreover, the possibility that the revenue from the fat tax would not go to improving the health system or subsidizing healthy food so it is a cheaper option. In conclusion, the economical effectiveness of the fat tax can be measured by the influx of revenue to the government, an increase f contribution in GAP by the agricultural section and past successes of both the tobacco and alcohols tax.