On BBC Radio 4’s Today programme a few months ago, I heard some befuddled killjoy from the British Medical Association demanding a state subsidy of ‘healthy’ food to go alongside a tax on ‘unhealthy’ food. When it was explained to her that the government does not actually control the price of food, she was at a loss to explain how such a system would work in practice.
Eighty pages into Bad Habits, Hard Choices, having teed the subject up with some bog-standard anti-consumerism, David Fell gets down to brass tacks and puts forward his own plan for sin taxes and saint subsidies in the food sector. It’s a terrible plan, but at least it is there in black and white. If the government wanted to use the tax system to control people’s diets, it couldn’t do much better than this, and so it deserves attention.
Fell calls his scheme SmartVAT, and it works as follows. We split food into three categories: healthy; unhealthy; and somewhere in between. We charge VAT on unhealthy food at 25 per cent, but set a negative rate (that is, a subsidy) for healthy food at 20 per cent. All other food is charged at a rate of five per cent, presumably to balance the books. These are Fell’s figures and he is open to suggestions about changing them, but you get the general idea. At the end of the tax year, retailers send off their VAT returns in the usual way, and pay tax (or receive a refund) based on the volume of sales of each of the three categories.
There are several problems with this, none of which is trivial. Contrary to what you may have heard from quack nutritionists and certain celebrity chefs, food cannot be neatly divided into ‘healthy’ and ‘unhealthy’ categories. Fell acknowledges that defining food as good, bad or indifferent is a challenging prospect, but believes it could be done by creating a citizens’ jury of ‘many hundreds of people, perhaps even thousands’ at a cost of ‘many millions of pounds’. Throwing money at the problem will not solve it, however. When he talks about ‘unhealthy’ food, he really means ‘fattening’ food – he lives in terror of the obesity ‘epidemic’ – but that is more a question of quantity than intrinsic qualities. Nuts and cheese are high in calories, but are not generally considered to be unhealthy. Orange juice is full of vitamin C, but has more sugar than a coke. Potatoes are not unhealthy, but what if the consumer takes them home and turns them into chips? Is butter better than margarine? Is a bag of salt – which contains no calories but will kill you if you eat it all at once – healthy or unhealthy? These examples could be multiplied many times over and raise problems that are not going to be resolved by the wisdom of crowds. As registered dieticians tire of having to explain, it is the diet that matters, not individual products.
Fell’s scheme amounts to a tax on the poor and a subsidy for the middle class
