In an Australian study published today, we show that if the government were to combine taxes and subsidies on a range of foods and beverages, it could substantially improve the health of Australians and potentially free up billions in health care spending. In the past five years, no fewer than 13 countries have announced new taxes on sugary drinks or unhealthy foods to address the enormous and growing burden of obesity and its associated chronic diseases. So far, the Australian government has remained steadfastly quiet, so we thought we might help with some facts. We spend A$4 billion every year on health care associated with obesity in Australia. Successive federal governments have invested in programs to motivate people to shape up and eat better, such as “Get Moving” and “Go for 2 and 5”. But rising obesity rates suggest this is not enough. Especially in the face of powerful food industry marketing and an environment where unhealthy foods are widely and cheaply available. By tweaking the prices of foods and drinks, to make healthy options more affordable relative to the less healthy products, we can influence what people will buy.

Will it work?

There are precedents. In Australia we have raised the price of cigarettes and smoking has gone down, and we have raised the price of alcoholic drinks and consumption has gone down. Mexico’s sales of unhealthy foods have fallen a year after introducing an 8% tax on these foods, compared with no change in sales of un-taxed foods. By taxing unhealthy food components (saturated fats, excess salt, sugars) and subsidising healthy foods (fruits and vegetables) we aim to tip the pricing structure in favour of choosing healthier options. It can also provide an incentive to processed food manufacturers to improve the nutritional profile of their products. Eating foods high in saturated fats, salt and sugar can lead to high blood pressure and obesity, which puts people at risk of diseases such as heart disease, type 2 diabetes and cancer.

How would Australia benefit?

In our study we modelled the effects of adding a tax to foods based on saturated fat, salt and sugar content, adding a tax on sugar-sweetened beverages, and placing a subsidy on fruits and vegetables. The policies were designed to have less than a 1% impact on average household food and drink expenditure. We found over the lifetime of our Australian population of 22 million (that’s how many there were at the start of our simulations in 2010), we would gain an estimated 470,000 disability-adjusted life years (DALYs; meaning an extra year of life in perfect health) with the combination of taxes and subsidy.