Evaluate the view that the only way to reduce the UK’s growing obesity problem is to introduce a tax on fatty and sugary foods.
A tax is a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions. Obesity is the state of being grossly over weight. The obesity problem in the UK is becoming more and more of a problem in the UK. Estimates suggest that by 2050 more than half of the British population will be obese (many have said that this is an underestimation). This will have huge effects on the government. Obesity is already digging deep into the pockets of the NHS due to rises in the number of diabetes and heart attacks, so one can only imagine how bad it is going to be in 2050. Taxing fatty foods is not the only way to tackle this issue and it doesn’t seem to be the most efficient and effective path to take either. The other options are: compulsory exercise; increasing exercise; subsidies healthy foods; tax obese people directly or charging obese people NHS costs.
Indirect tax is a tax on spending on a specific consumer good. As we can see from the effect that indirect taxes has had on cigarettes and alcohol, people have had mixed views. This is because the amount of cigarettes and alcohol hasn’t increased as much in comparison to the money that the government makes. Critics of indirect taxes of inelastic goods say that the government is just making people spend a higher percentage of their income on goods. However, supporters of indirect taxes say that it is a good incentive for them to stop. (See graph on separate sheet). Because scientists say that eating fatty foods is a psychological problem rather than just filling your stomach, economists treat it as inelastic. Therefore on the graph, the demand curve is very steep. As you can see for only a little bit less in quantity, it costs a lot more. Incidence of tax is how the tax is divided between producers and consumers. Because fatty and sugary foods are inelastic, the producer is able to pass on most of the tax to the consumer by raising the price without losing much profit. What you end with is the government having a lot of money and producers with more or less the same amount, and you still have obese people with less money.
Fatty foods are often addictive to many people because many people have psychological relationships with food. If a good is inelastic it means that people will buy it no matter what the price because they are hooked and believe they need the good in order to survive or feel good. As mentioned above, economists consider fatty and sugary foods inelastic because people seem to consume them despite of all attempts to prohibit the consumption of them. It is for these reasons that I believe that people, regardless of their weight will still be buying fatty foods. So government will be making most of the profits. Is this really the best option?