417. Should we put a thin subsidy on the policy table in the fight against obesity-?

Grace Lordan and John Quiggin, School of Economics Discussion Paper No. 417, February 2011, School of Economics, The University of Queensland. Australia.

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Abstract

The idea of using ‘fat taxes’ to curb obesity rates has been raised by many. In particular, the idea of taxing sugar-sweetened beverages (SSBs) has received considerable attention in the United States and has recently been discussed by President Obama. Rather less attention has been given to the alternative of ‘thin subsidies’, that is, subsidies for the consumption of foods or beverages likely to be associated with reduced incidence of obesity. This commentary examines the case for a subsidy for artificially sweetened beverages (ASBs) or ‘diet soft drinks’. In this commentary, we outline the evidence on the relationship between health outcomes, most notably obesity, and the consumption of SSBs and ASBs. In the light of the evidence we consider the economic effects of taxing SSBs, and the way in which those effects would be modified by the adoption of the alternative ‘thin subsidy’ based on subsidising ASBs.