Dump the Twinkie Tax Idea

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posted March 30, 2006
Canada’s top-physician, Dr. Ruth Collins-Nakai, president of the Canadian Medical Association, proclaimed Wednesday that junk food should be taxed in Canada in order to combat the “epidemic” of childhood obesity. While Dr. Collins-Nakai’s proposal might be well-intentioned, such a policy would negatively affect the lives of all Canadians regardless age or girth. Reducing the prevalence of obesity requires a more targeted policy solution.

Consider the case of a Canadian who runs 3 times a week, perhaps plays sports from time to time, eats a well balanced diet, and is in excellent physical condition. If she desires a chocolate bar every day with her lunch, or likes to relax with a soda and watch a movie on the weekend, why should she pay more to do so?

While it is true that obesity imposes costs on the rest of us—obese people place a greater burden on the health care program which is financed through our tax dollars—the consumption of junk food by itself imposes no costs on other Canadians.

Charging all Canadians more for their Twinkies through a junk tax requires them to pay twice for the health care costs of the obese: once through taxes that support the delivery of increased health care services to these individuals and a second time through taxes intended to reduce the prevalence of obesity by discouraging the consumption of “junk foods”.

Fortunately, better options are available to encourage healthier lifestyles. The key is that the solution must be one that addresses the problem, not a blunt policy tool that indiscriminately affects the lives of all Canadians.

Since the incidence of obesity is in many cases controllable, and since the public burden of obesity is borne almost entirely through the Medicare program, it makes most sense to scale the Medicare premiums of obese individuals by the publicly borne medical costs of being obese. Of course, appropriate reductions in the charge for low-income families and for those who are less able to control their weight because of an underlying medical condition should be a part of the plan.

Such a scaled health premium not only gives individuals the incentive to lose the extra pounds and parents the incentive to see to their obese kids, but is also sensitive to the existence of controllable obesity. Unlike a junk food tax to which governments will likely become addicted, the premium would abate entirely when controllable obesity was eliminated.

Most importantly, however, a scaled health premium imposes the cost of controllable obesity on those responsible for it. It also does not negatively affect those who are choosing healthier lifestyles, and in fact provides them a benefit for doing so.

Junk food taxes are simply too blunt a policy tool to deal with the rising prevalence of obesity. Targeted solutions that require the obese to take responsibility for the health costs created by their lifestyle choices are a far smarter solution. Twinkie Taxes are simply bad policy.

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