How other countries could inspire a Labour ‘fat tax’

Rachel Reeves has a difficult challenge in identifying potential opportunities for additional tax receipts ahead of her first Budget so could the answer lie in a new tax on food, commonly referred to as a ‘fat tax’? 

In a recent poll for the charitable organisation The Health Foundation, it was found that there was widespread support for boldertax policies on unhealthy food. The poll was undertaken in May 2024 and those surveyed were also asked to confirm their voting intention between Labour, Conservative and Liberal Democrat.

59% of those surveyed supported the view that a tax should be levied on companies producing food high in sugar and salt, with some of the resulting tax revenues to be used to fund fresh fruit and vegetables for low-income families. That percentage rose to 70% of the Labour voters surveyed compared to 54% of Conservative voters and 63% of Liberal Democrat voters.

In a similar question, 53% of those surveyed supported the introduction of a tax on ultra-high processed food, again on the basis a proportion of the tax receipts were used to fund fresh fruit and vegetables for low-income families. That percentage was broken down as 64% of the Labour voters and 54% of Liberal Democrat voters surveyed. It fell to 47% of the Conservative voters polled, albeit only 27% opposed the policy.

So if the Labour government was to explore a ‘fat tax’ policy in the UK, what might it learn from other countries? In a paper published earlier this year by Imperial College London (ICL), a review was undertaken of various studies looking at the 16 countries that have previously applied taxes to food that were high in fat, salt and sugar. 

Those countries include Mexico which introduced an 8% tax on “non-essential energy dense food”, broadly junk food, to try and tackle its obesity crisis. Similarly, countries like Norway, Fiji, Hungary and Finland have applied taxes to sugary snacks and chocolate. 

The ICL paper’s conclusion was that lower-income groups demonstrated “heightened responsiveness” to these food taxes, experiencing “more substantial health benefits”. The design of such a ‘fat tax’ was found to be important to its success, in particular ensuring it was combined with things like healthy food subsidies.

Perhaps the most interesting approach to a ‘fat tax’, not considered in the ICL paper, is that taken in Japan. In 2008, Japan initially introduced what is commonly referred to as the ‘Metabo Law’. This meant that employers and local government were required to add a waist measurement test to the mandatory annual check-ups of those aged between 40 to 74. Those who fall foul of the prescribed limits are given support and guidance to help them lose weight. Ultimately however, the buck could stop with the employer who can face fines.

You will get long odds on the prospect of Rachel Reeves prescribing that workers get their waistlines measured each year in the Budget. Even if a ‘fat tax’ is popular in principle, a lot of care would be needed to ensure it did not punish those on the lowest incomes and actually incentivised people to make healthier eating choices. Perhaps the best way to ease the funding pressures of the NHS would be to try and make the nation eat more healthily.