Will A Tax On Junk Food Help Mexico Fight Obesity?

See Mexico Tries Taxes to Combat Obesity by Amy Gutrie, WSJ, 10-18-13.

This chart illustrates the issue.



 Excerpts:

"The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients."

"Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs."

"All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

"We're a country of malnourished fatsos," José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico's high consumption of soda and snacks on incessant TV advertisements and poor education."

"Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. "We can't allow last-minute taxes," said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.
"There's no such thing as junk food, just junk diets," said Felipe Gómez, head of a regional food makers' group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse."