A new tax on the menu
Even before this week’s budget, they were looming. Here in Ireland, Minister for Health and Children James O’Reilly has signalled a possible sugar tax, primarily aimed at carbonated drinks. This may raise up to raise €50 million a year in Ireland. Similar sugar tax legislation will come into effect in France, in January.
Mr O’Reilly says he will write to fast food outlets to ask them to introduce calorie labelling, rather than introduce a broader ‘fat tax’ along the lines already in force in Denmark, which is a globally significant dairy producing country like Ireland. The Danes have imposed a surcharge on foods that are high in saturated fat. Butter, milk, cheese, pizza, meat, oil and processed food products that contain more than 2.3% saturated fat are subject to tax in Denmark, at the rate of 16 Danish kroner (about €2.15) per kg of saturated fat. That works out at about 50c on the price of a burger, and 40c on the price of a small packet of butter.
Across the globe, similar initiatives are emerging. In September, Hungary introduced a ‘chip tax’, on salt, sweets and caffeine, levied at the first processor level. Already, food processors like Intersnack are claiming that this tax is threatening their investment and expansion plans in Hungary, and that it is simply a revenue collection technique for the financially stressed country. According to some estimates, it may raise as much as €111m per year.
In South Africa, a salt tax is designed to reduce the country’s very high rates of salt consumption, at 8-10 grams per day, double the recommended rates and government targets.
Measures like these are spurred on by report after report which outlines obesity and other health concerns. Recently, the Economic and Social Research Institute found that 19% of Irish nine-year-olds are overweight, while 7% are obese. Over 60% of Irish adults are now considered overweight or obese. This contributes to a dramatic increase in type 2 diabetes and heart disease and cancer. Denmark has far lower rates of obesity than Ireland, but has lower life expectancy rates than the other Scandinavian countries — hence their fat tax initiative.
As for salt, excessive consumption is strongly linked to hypertension, which is in turn linked to heart disease and stroke. More recent research has also linked high salt intake to both cognitive development and gastric problems. Romania, Finland, Germany, New Zealand, 40 US states and a host of other countries have also introduced such legislation.
Health concerns have given rise to other reactions which will be equally taxing for the food industry. Here in Ireland, there is a proposed broadcasting ban on what are considered to be unhealthy foods. The Broadcasting Authority of Ireland (BAI) has completed a consultation on a proposed TV advertising ban up to 9pm for foods high in sugar, salt and fat. Controversially, this even includes cheese.
The National Dairy Council (NDC) has concerns about what it calls “the potential reputational issues that could take years to reverse, if the Broadcasting Authority proceeds with its proposals to ban the advertising of cheese to children under the age of 18, potentially categorising cheese as ‘junk food’.”
The NDC claims, “The nutrient model the BAI proposes to use does not fully take into account many of the positive nutrients in cheese.” The organisation claims that this would categorise cheese as less healthy than other food types, even nutritionally empty products like diet cola.
“Looking at data from national surveys, it’s clear that cheese consumption remained relatively stable during the same time period in which the prevalence of overweight and obesity increased among Irish children and teenagers,” said Dr Catherine Logan, the NDC’s nutrition manager.
“Ironically, the positive nutrients in cheese, such as calcium, that are ignored by the proposed nutrient model, can help to tackle some of the public health issues highlighted by the BAI itself in its own consultation document,” says Dr Logan.
Kevin Kiersey of the IFA’s National Dairy Committee says the TV ban would demonise some healthy foods such as cheese, damage the prospects of one of our most promising economic sectors by restricting its marketing options, but would do nothing to improve the diets of children and teenagers.
I put some of these points to the Irish Heart Foundation. “The Irish Heart Foundation believes that cheese and cheese products should not be made an exceptional case,” says Janis Morrissey, dietitian with the Irish Heart Foundation.
I asked Morrissey about soft cheeses, of which production is growing in Ireland. “If a cheese product contained low levels of saturated fat and salt for example it could possibly pass the nutrient profiling criteria and therefore be deemed appropriate to advertise to children,” she says.
On cheese, the BAI states in its consultation document that most hard cheeses such as cheddar and processed cheeses are also high in saturated fat and salt, and there are other healthier sources of the same nutrients, such as low fat milk and yoghurt.
The hospitality sector is also worried by fat taxes. “Ireland is the most expensive country in Europe to run a restaurant. Creating a fat tax will cost jobs,” says Restaurants Association of Ireland chief executive Adrian Cummins.
IBEC, in a November 2011 publication, citing OECD research of 2010, claimed that fat taxes generate competitive disadvantage and were likely to discourage future inward investment.
“In Ireland, such a tax would more than likely restart cross-border shopping, as prices between North and South diverge. In addition, these sorts of taxes drive unfair competition between food categories, by changing relative prices based on subjective criteria. The Denmark tax on saturated fat imposes increased costs on exports, making Danish products more expensive in their export markets. Irish exports would be severely damaged if such a system were adopted here”.
Our food and drink exports are expected to grow to €9 billion this year. Dairy exports rose by an estimated 17% to €2.3bn. We have Food Harvest 2020 targets to take food and drink exports to €12 billion by the end of the decade.
Farming and food are thriving relative to much of the rest of the Irish economy. But food health legislation has now emerged as a threat to prospects.
