Start main page content

How junk food industries damage your health and taxes protect it

- Deborah Minors

Public health experts have revealed how global junk food corporations undermine health and proposed how taxes can protect it.

Two visiting professors to Wits, hosted by PRICELESS SA in the School of Public Health,have delivered public lectures relating to the tax on sugar-sweetened beverages (SSBs). PRICELESS is the Priority Cost Effective Lessons for System Strengthening South Africa programme. It provides information to improve the allocation of resources for national priorities that address public health.

Professor Rob Moodie’s talk on October 24, entitled: Profits and chronic disease: how the junk food industries damage our health interrogated strategies that the junk food industries use to drive sales and increase profits. Moodie is Professor of Public Health at the College of Medicine, University of Malawi, and Professor of Public Health at the University of Melbourne's School of Population and Global Health.

“This presentation could just as well have been called ‘people’s health vs. corporate greed’. Transnational corporations are major drivers of non-communicable disease [NCD] epidemics. These corporations profit from increased consumption of tobacco, alcohol, processed food, etc.,” says Moodie.

These corporations earn profits from selling alcohol, tobacco, packaged food, soft drinks, processed food, oil and fats, and snacks/snack bars. Tobacco companies have over 60 years executed strategies to drive profits. Over the past decade, however, the imposition of taxes and plain packaging on tobacco products curtailed consumption.  

Insidious strategies

“Tobacco [curtailment] has had great success but alcohol and junk food and junk drink industries undermine every attempt to introduce effective health policy,” says Moodie.

Other methods to increase consumption despite these products' threat to public health include:

  • Promoting choices, labelling, and diversifying products
  • Investing in partnerships, corporate social responsibility, and physical activity programmes
  • Commissioning research to discredit any moves to regulate
  • Using PR to sway public opinion and influence reporters
  • Monitoring key public health researchers.

Junk food industries use their size, power and influence to market their products and position, says Moodie. Coca Cola, Mc Donald’s and Pepsi are among the top five best known brands in the world and Coca Cola, Pepsi and Proctor & Gamble Food are among the top five advertisers in the world.

The global beverage industry spends billions on product advertising and then blames individuals for not practicing self-control – much focussed on children”, says Moodie.

In South Africa advertising spend by Coca Cola increased 33% from 2014 (R193m), to R259m in 2016. Seventy percent of advertising is on television.

“Coke uses massive sponsorship of sport and music to block sugar tax,” says Moodie.

The ‘sugar tax’ refers to a tax on sugar-sweetened beverages (SSBs) tabled in South Africa. Public health experts say the tax will curb consumption of SSBs, which contribute to obesity, diabetes, and other lifestyle diseases that impact health and the economy.

“Big business will do everything to stop SSB tax in South Africa and stop it spreading to other middle income countries, given that this is where their markets are,” says Moodie.

Using fiscal policy to prevent non-communicable diseases

In this regard South Africa is a “first follower” and its role globally significant, given that SA is only the second country (after Mexico) to take SSB tax to the national level.

On Friday 11 November, Frank Chaloupka, an American Professor of Economics, presented research to the South African Treasury on the effects of prices, policies, and other environmental factors on diet, physical activity, and obesity. Chaloupka is a Distinguished Professor at the University of Illinois at Chicago and Director of the UIC Health Policy Center. He delivered a public lecture at Wits hosted by PRICELESS SA on Monday, 17 November.

Chaloupka has 30 years’ experience in the economics of health behaviours. He has seen non-communicable diseases become the leading cause of deaths worldwide and the impact that premature death among middle-aged (working) people has on the economy.

“There are just a handful of behaviours that contribute to a lot of these NCDs if you look at the leading causes of death: Tobacco use, unhealthy diets, physical inactivity, and excessive alcohol use. It suggests to me if we can do something to change those behaviours, it will have an impact,” he says.

Regarding SSBs specifically, Chaloupka presented research which showed that a 10% increase in the price of SSBs resulted in a 12.1% reduction in consumption of these products. Thus the basic laws of economics apply: price increases result in consumption reduction and, ultimately, healthcare improvements. SSBs in particular are linked to obesity, type 2 diabetes and dental problems.

Against higher taxes because…

Common oppositional arguments to the SSB tax include denying that taxation reduces consumption and proposing that taxation increases tax avoidance/evasion. Opponents also decry taxation’s ‘impact on the poor’ and on the economy.

Chaloupka argues that tax evasion still leads to reduced consumption and points out that countries with lower taxes have higher illicit trade in tobacco. Opponents also voice concerns about the ‘regressivity’ of higher taxes on alcohol, tobacco and food/beverage. However, although most excise taxes are regressive, tax increases can be progressive, says Chaloupka. Generally the poor are more price-sensitive and the health benefits that result from tax increases are progressive. He referenced the "cycle of poverty and tobacco", citing research that shows poor nutrition and behaviours such as tobacco and excessive alcohol use, and poor nutrition, in fact contribute towards poverty. 

 

“When considering the impact on the poor, we need to consider the overall fiscal system. The key issue with taxes is what is done with the revenue it generates. There is greater public support for tax increases when revenues are used for prevention and control programmes and/or other health programmes,” says Chaloupka.

He cautions, however, that the tax structure is important to ensure public health impact. Excise tax (based on quantity/volume) is preferable to sales tax or ad valorem excise tax (taxes based on price). Excise tax is included in shelf price, making it more apparent to the consumer, it is easier to administer, and it reduces incentives for switching to cheaper brands with larger quantities. Revenues are more stable and less subject to industry price manipulation.

“Taxes are generally considered one of the ‘best buys’ in NCD prevention, and tax based on sugar content [as in SA] is likely to have greater public health impact,” says Chaloupka.

Share

Giving to Wits

School of Public Health Building

Whether you invest in a promising young student, or contribute towards vital research or new buildings and facilities – giving to Wits brings great personal satisfaction and lasting results you can be proud of for years to come.

Give to Wits