The Australian government should hike the GST rate for fizzy drinks and processed foods, and direct the proceeds to subsidise fruit and vegetables, a new research paper from Victoria University recommends.
Associate Professor Lidia Xynas, author of Obesity and Taxation – Is Australia Ready? said slightly boosting the GST on sweetened sugary beverages and highly processed foods from their current rates of 10 percent was a simple and effective way to address Australia’s growing obesity problem.
"Better health, better life – these are objectives that all Australians must strive for," she said. "Obesity and overweight issues can be addressed positively using the GST as a vehicle for badly needed change."
The soon-to-be-released Australian Health Tracker, from Victoria University’s Mitchell Institute, highlights that Australia’s national obesity rate has risen 27% over the past 10 years, with two-thirds of Australians now overweight or obese.
Dr Xynas said dozens of countries have announced new taxes on unhealthy foods in recent years, but some have had more success than others.
For example, Japan’s ‘Metabo law,’ which penalises employers with overweight employees and local governments with fat residents, was only marginally successful because it resulted in stigmatising individuals. Denmark’s 2011 tax on unhealthy ‘inputs’ such as saturated fats was cut short in 2013 due in part, to unsustainable costs to small- and medium-sized manufacturers.
A unique Australian answer could lie in applying a higher GST to junk food – a form of ‘hard paternalism’ – with short-term ‘soft paternalism,’ approaches such as education in schools accompanied by subsidies for fruit and vegetables, and stricter regulations on junk food advertising, said Dr Xynas.
Australian Bureau of Statistics data show that while half the country’s adults and about two-thirds of children eat recommended serves of fruit, only a tiny 7 per cent of adults and 5 per cent of children eat enough vegetables.
“Australia’s broad-based GST is a relatively uncomplicated consumption tax that we’re already used to, and administratively, it wouldn’t be difficult to set up, she said.”
Dr Xynas said she expected some industry and public backlash to the proposal, but the measures could accelerate the recent trend for fast-food manufacturers to create healthier options.
She arugued the government was justified in using taxes to encourage behavior change if it improved public health and safety, pointing to precedents such as excise taxes on cigarettes and alcohol, which have led to curbed consumption.
Dr Lidia Xynas is a tax expert in Victoria University’s College of Law and Justice. She is available for comment.
Her study, ‘Obesity and Taxation – Is Australia Ready?’ was published recently in the Journal of Law and Medicine.