WHO: Excise taxes on soda bolster population health and create jobs

The World Health Organization highlighted the upsides of taxing sugary drinks or unhealthy foods and, while healthier populations are an important part, the benefits also include increased government revenue and new jobs. 
By Jeff Lagasse
09:41 AM
WHO excise population health jobs

Healthcare professionals understand that taxing unhealthy foods and drinks, notably sugar-sweetened beverages, can help improve population health efforts. What has been discussed less, until now, is that those same excise taxes can also create a net increase in jobs and raise money for federal governments, according to the World Health Organization.

The WHO concluded in a new report that hiking taxes on sugary drinks would result in a proportional reduction in consumption, especially if the retail price for a given item is raised by 20 percent or more.

On the flip side, there is evidence that subsidizing fruits and vegetables, and reducing their price by 10 to 30 percent, can increase consumption of those foods. 

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Combining those two strategies would have the most effect on population health, WHO found. As with tobacco taxes, specific excise taxes based on a percentage of retail price would likely be the most effective -- more so than sales or other taxes, WHO said. What’s the difference? They reduce the incentive to switch down to cheaper options because they increase the price of all products affected by the tax in the same way.

Excise taxes also provide more stable revenues, are easier to administer, and are not vulnerable to price manipulation by the food industry, WHO found. That would hold true over time providing the taxes are adjusted regularly to account for inflation and income growth.

These fiscal policies are key to reducing the consumption of calorie-rich foods and addressing obesity and diabetes, WHO said. In 2014, 39 percent of adults worldwide aged 18 and older — 38 percent of men, and 40 percent of women — were overweight, defined as having a body mass index at or greater than 25. Between 1980 and 2014, the worldwide prevalence of obesity nearly doubled, with 11 percent of men and 15 percent of women qualifying as such. And in 2013, about 42 million children under the age of 5 were overweight, a number WHO said has been continually rising.

Fiscal interventions could curb or reverse those trends, the study found, but they also have the potential to correct market failure, generate revenues for state or federal governments and help prevent and control noncommunicable diseases, such as diabetes — thereby reducing healthcare utilization.

The biggest hurdle to implementing these policies is opposition from the food industry itself, the analysis found. Like the tobacco industry, WHO expects that food and drink manufacturers may engage in factually dubious campaigns in order to retain and grow market share.

If that opposition can be overcome, the evidence attests to the efficacy of such policy interventions.

WHO pointed to recent studies in California and Illinois finding that taxes on sugary drinks led to a net increase in jobs, despite a small dip in jobs in the beverage sector. This occurs because consumers redirect their purchases toward untaxed options, thereby stimulating growth in those products.

This article originally appeared on Healthcare IT News sister site Healthcare Finance. Twitter: @JELagasse

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