New Study Shows That Taxing Unhealthy Foods Could Significantly Reduce Healthcare Costs

A receipt that shows a sugar tax.

Photo credit: Shutterstock

Many have argued that the government ought to tax unhealthy foods and subsidize healthy ones. The theory is that it will incentivize people to eat healthier and reduce medical costs. A new study published in PLOS Medicine seems to confirm this theory.

The study found that if Australia were to tax saturated fat, salt, sugar, and sugar-sweetened beverages and subsidize fruits and vegetables, it would save the country an estimated $2.3 billion (USD).

The study is based on models that are capable of predicting the kind of impact this type of policy would have on consumers. Aside from massive economic savings, the results also indicated that the average citizen would gain an additional lifetime expectancy of 1.2 years.

The study didn’t address, however, how these changes would affect the food industry. If junk food were taxed, it’s safe to assume that people would buy less of it. And on the other side of things, if healthy foods were subsidized, it’s safe to assume people would buy more of it. Therefore, fruit and vegetable growers would likely benefit a great deal from this type of policy. But companies that produce soft drinks, chips, cookies, and the like would suffer a huge loss in sales.

There’s talk of this type of legislature being introduced in the United States. The problem is, junk food companies would never support it. Fast food companies and processed food manufacturers would lobby Congress to reject this type of bill. And why wouldn’t they? They stand a lot to lose if this type of bill were to be enacted.

But what would be a loss for junk food conglomerates would be a gain for the average citizen. People would lose weight. Obesity-related illnesses would decline. And the hard-working citizen would save hundreds, if not thousands, of dollars in medical costs.

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