Battling the Couch Potatoes: Hungary Introduces 'Fat Tax'

 

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The idea was axed after the government considered its potential impact on consumers, particularly given rising food prices. There were also concerns that the tax might lead low-income Romanians to resort to even cheaper products, potentially worsening their diets.

But the Hungarian parliament seemed to believe that the benefits outweighed the risks when, on July 12, it passed a tax very similar to the one rejected in Romania.

Will Tax Put Poor at Disadvantage?

Initially dubbed the "hamburger tax," the new legislation is now referred to as the "chip tax" or "fat tax," because it applies to products like packaged snacks and sugary drinks rather than fast food.

"The Hungarian tax is a tax on products with high sugar, salt, and/or caffeine; taxable products include soft drinks with added sugar, energy drinks with added sugar and caffeine, pre-packaged sweetened products, salty snacks, high salt content condiments, soup mixes, gravy mixes and bases," explained Lisa McCooey, director of communications for Food Drink Europe, an industry lobby group.

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Hungarians already spend 17 percent of their income on food, and they pay an extra 25 percent tax on most of the food and drink products they consume -- one of the highest rates within the EU. A major criticism of the new tax is that it will hit low-income groups the hardest, given their higher consumption, on average, of processed foods. "The economic situation here is really pretty bad. A lot of people don't have any extra money to spend on anything," said Banfalvi. "Life here is not cheap if you're an average Hungarian making an average salary."

While generally supportive of the new tax, Archie Turnbull of the Brussels-based European Public Health Alliance, a network of public health NGOs, suggested in a letter to the Hungarian government that it "consider using other pricing mechanisms or subsidies to make the healthy options" of fresh fruits and vegetables "more widely available and affordable."

'Not An Effective Instrument'

There are also questions over the effectiveness of fat-tax legislation. The growing list of taxes on unhealthy foods is leading to a debate on whether an increase in taxes can actually translate to a decrease in obesity.

"Scientific research shows that taxation is not an effective instrument in addressing consumer behavior and will have no impact on obesity rates," McCooey argued. "Consumer information and education, not tax, is the way to advance consumer understanding of healthy eating."

"The link between the price of a product and its purchase is clear and has been well substantiated," countered EPHA's Turnbull. But, he added, taxes alone cannot lead to healthier habits. "Combined with health promotion measures designed to increase awareness of the health issues associated with a poor diet, the impact of fiscal measures applied to food policy can be significant."

But in a country where goose fat is common in cooking and where, as Banfalvi says, "the salads are just different plates of pickled vegetables," an increase in prices for unhealthy foods is no small change.