In modern times, gross domestic product (GDP) has become a measure for a country’s wellbeing. If the economy is growing, then things must be good. If it is shrinking, then not so much. Using GDP to measure how well we are doing is increasingly at odds with reality.
A key problem with growth is that it requires endless production and its close companion, endless consumption. To prevent growth stalling, we need to buy more and more things and more and more paid experiences. For economies to continue to ‘grow’ we need to have insatiable consumption.
In our heart of hearts, we know this consumption is mindless madness. We eat mountains of food that predispose us to heart disease, diabetes, and cancer. We buy stuff we never knew we wanted and never use again. We know that gadgets have parts that are irreplaceable when they do break down so that the only option is to discard them and buy new ones.
Another problem with economic growth is that its rewards are not evenly shared. Average income is calculated by taking the size of a country’s economy and dividing it by the number of people living there. This is deeply misleading. If a large proportion of wealth is created by 1%, as is the case in many rich countries, many people are left working harder and harder to maintain their living standards and end up questioning what this growth is all for.
The Commission on Taxation report, Foundations for the Future, is attempting to address this balancing act — not immediately but in the medium to long term. Specifically, it addresses promoting business and economic activity while at the same time fairly supporting the most vulnerable in society and reducing carbon emissions.
Social cohesion — an idea that all groups in society feel connected to each other and to one society — is a key theme, while stating that both older and younger generations have an equal share of the State’s resources.
Reducing carbon emissions must be done in a way that maintains that social cohesion. Critically this means there must be a ‘just transition’ where every group in society is supported to make the changes needed.
In terms of public health, the commission was specifically tasked with examining “how effectively good health is promoted in Ireland and to present relevant reforms to advance and incentivise that goal”.
Taxes that promote public health are imposed on products that have a negative public health impact, such as tobacco, alcohol, and sugary drinks. The commission was particularly supportive of the World Health Organization-recommended sugar-sweetened drinks tax introduced in Ireland in 2018. The tax raised €33m in 2019.
Sugary drinks tax
In terms of health gains, taxes on sugary drinks are effective in reducing consumption and preventing obesity. Evidence shows that a tax on sugary drinks, which raises prices by 20%, can lead to a reduction in consumption of around 20%. Research published in the BMJ suggested that people were buying and consuming less sugar from soft drinks since the introduction of the tax in 2018. While overall sales of sugary drinks remained unchanged, the sugar purchased in these drinks decreased by about 30g per household per week, or almost 10% — equivalent to three fewer teaspoons. That might not sound like a lot but in public health terms, it is significant.
The tax was effective in reducing consumption of drinks high in sugar but also incentivised reformulation to reduce the amount of sugar in soft drinks so that they fell into the category of drinks — less than 5g sugar per 100ml — that are not required to be taxed.
The tax is working exactly as intended, suggesting that its use should be expanded in terms of strategic regulatory options to promote healthier diets, according to researchers at the George Institute for Global Health.
In Ireland, all the proceeds from the sugary drinks tax have gone into the exchequer, unlike the UK which specifically targeted its sugar tax to fund sports and breakfast clubs.
The WHO predicts that Ireland’s population will be one of the world’s most overweight by 2030. With one in four children and two in three adults carrying excess weight, obesity is at an unacceptably high level. These rates have changed little in recent years, despite evidence-based healthy eating and awareness programmes. Obesity rates are much higher in low-income groups and individuals living in deprived areas, with half of people under 35 overweight or obese compared to 37% of those living in affluent areas.
The lifetime cost of obesity is €4.6bn and it has a significant impact on the labour market, impacting early retirement, absenteeism, and productivity.
Key risk factors for obesity include the environment, access to healthy and affordable food, physical activity, exercise and leisure activity, and education. All these factors are impacted by living in a deprived area where food environments are consistently shown to encourage the consumption of unhealthy food — ultra-processed, energy-dense, nutrient-poor food that is intensely promoted and easily accessible.
Almost half of Irish shopping baskets contain ultra-processed foods, making Ireland the third highest consumer of these foods after the UK and Germany. Ireland has the highest prevalence of sweet and savoury snack consumption and the second highest confectionary consumption among 24 EU countries and the UK, and dietary intake of ultra-processed foods is a key driver of overweight and obesity.
The Roadmap for Food Reformulation in Ireland (2021) states that there is a “clear and urgent need to achieve further substantial reductions in the salt, sugar, saturated fat content, calorie density, and/or single-serving portion size across a wide range of major food and drink products in Ireland.”
Voluntary salt and sugar reduction targets in the UK in recent years have produced limited results and can have the effect of delaying more substantive strategies to get rid of the most harmful products altogether. The effect of the sugary drinks tax on driving industry reformulation, on account of its mandatory application, is a likely benefit of introducing a similar tax on ultra-processed food — both in terms of sugar, salt, and fat content but also in portion size of sweet and savoury snack products.
The commission recommends the introduction of a tax on ultra-processed foods for the benefit of public health. Amid the cost-of-living crisis, this is unlikely to be introduced soon. If and when it is, to achieve maximum benefit, particularly to the most vulnerable, the huge incomes that such a tax would generate should be ringfenced to support healthy eating and physical activity initiatives, especially for young children living in deprived and low-income areas.
Taxes have a key role in raising revenue — as important is their ability to influence public health outcomes. The evidence shows that Ireland falls behind international best practice for implementing policies that tackle the promotion of unhealthy food to children and utilising fiscal policies to support healthy food choices and food composition targets. Fiscal policies that challenge the unhealthy food environment are an opportunity to address this shortfall. Funds generated need to be ringfenced to benefit the most vulnerable.
Dr Catherine Conlon is a public health doctor in Cork and former director of human health and nutrition, Safefood