Junk food taxes appear more effective than healthy food subsidies

© 2010 Joshua Stark

Grist reports that a recent study suggests junk food taxes are more effective at promoting healthy eating than healthy-food subsidies.
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In this study, participants were offered various choices over a number of weeks. At different times, taxes of 25-50% were added to junk food, and/or savings of a similar amount were given to healthy food. In short, it was observed that participants who saved money on discounts spent their savings on junk food (do I hear a collective "duh!" from everybody thinking about their own shopping choices?).

What interested me the most was the definition of "junk food". Researchers used what is called the calorie for nutrient rating, or CFN. Foods with a CFN of under 30 were considered healthy.

The reporter muses on the impact of a soda tax as a possible start toward encouraging healthier eating, noting that soda's CFN of 440+ was by far the highest (for example, mayo has a CFN of 197).

A sales tax, however, raises a flag for me, because sales taxes are regressive - the econ. term for, "charges poor people more than rich people" as a percentage of income. Aside from the unethical nature of that notion, building revenue streams for government programs from the much less reliable income of poor folks is bad economics (so is the notion of taking the relatively more valuable dollars from poor people and throwing into a gigantic pool of money). This particular tax, though, warrants a big however.

So - HOWEVER, when: A) there exist sufficient alternatives to paying the tax; and B) the tax is not created to deliver revenue or replace revenue to particular programs, but is designed to discourage purchases for approved reasons, then I am okay with sales taxes. For example, I am often a big fan of cigarette taxes, as they meet both criteria among the target group they attempt to impact (young people).

I think this concept passes the test. Taxed junk food would have an alternative, healthy food, and so long as it is sufficiently high enough to discourage its purchase, I'm in favor of it. A bad choice would be a small tax on junk food, as that would not push people out of purchasing it (especially because many junk food ingredients are federally subsidized).

I suggest a CFN-scaled tax, akin to the CAFE standards set for automobiles, only this tax would be for our own fuel, not our cars'. Foods with a CFN of, say, 30-50 would get a 20% tax, 50-100 would see a 30% tax, and so on. Over time, perhaps, the CFN standard could even tighten somewhat.

Companies could then have the chance to tweak their ingredients to bring their products down to lower brackets, and to advertise their great CFN numbers. Meanwhile, foods with low CFN's, but also with little marketing behind them (fruits and veggies in the produce aisles) would get a more level playing field because they would be relatively cheaper.

Any suggestions?