Food Pricing Strategies: Taxes and Subsidies
Reasons for Policy
- Americans consume too much dietary fat and sugar and not enough fruits and vegetables, which is associated with higher body mass index (BMI) and obesity rates.1
- Obesity-related medical expenditures were estimated to be $92.6 billion (in 2002 dollars), with taxpayers covering approximately one-half the costs.2
- Good taste, high convenience, and the low cost of energy-dense foods, in conjunction with large portions and low satiating power, may be the principal reasons for overeating and weight gain.3
- Financial disparities in access to healthier diets may help explain why the highest rates of obesity and diabetes are found among racial/ethnic minorities and the working poor.3
- Local Government
- Add substantial taxes to certain foods and beverages high in calories, fat, salt, or sugars, and/or low in nutrients
- Use taxes generated to subsidize the purchase of healthy foods (fruits and vegetables), especially for low income populations, and enhance the health-promoting environment in low-income communities
- Implement strategies at all levels of food access including the school, workplace, restaurant, supermarkets, and corner stores
- Decrease consumption of unhealthy, energy dense foods and increase consumption of healthy, less-dense foods
- Reduce BMI/obesity
- Reduce chronic disease incidence
Level of Evidence Available to Evaluate Effectiveness of Policy
For all policies we describe on this website, we have applied the Standards of Evidence as defined by Flay et al. (2005) in the Standards of Evidence document published by Prevention Science.
The effectiveness level of this policy is 3: Insufficient Evidence Available.
The levels of effectiveness as noted are:
- meets criteria for policy effectiveness (consistent, positive outcomes from at least two high-quality experimental or quasi-experimental trials using a comparison group or interrupted time series design);
- consistent evidence available linking policy with positive outcomes from high-quality observational studies only;
- insufficient evidence available for policy or policy components.
- Taxes and subsidies on food have the potential to influence consumption considerably and improve health, particularly when they are large.5
- Imposing substantial taxes on fattening foods may improve health outcomes, such as body weight and chronic disease risk, and may be particularly effective among overweight or low-income children.1,5
- More, scientifically rigorous, research is needed.
1 Powell, LM & Chaloupka, FJ (2009). Food prices and obesity: Evidence and policy implications for taxes and subsidies. Milbank Quarterly, 87(1), 229-257.
2 Finkelstein, EA, Fiebelkorn, IC, & Wang, G (2003). National medical spending attributable to overweight and obesity: How much, and who’s paying? Health Affairs, W3-219-W3-226.
3 Drewnowski, A & Darmon, N (2005). Food choices and diet costs: An economic analysis. Journal of Nutrition, 135, 900-904.
4 Flay, BR, Biglan, A, Boruch, RF, Ganzalez Castro, F, Gottfredson, D, Kellam, S, Moscicki, EK, Schinke, S, Valentine, JC, & Ji, P (2005). Standards of evidence: Criteria for efficacy, effectiveness and dissemination. Prevention Science, 6(3), 151-175.
5 Thow, AM, Jan, S, Leeder, S, & Swinburn, B (2010). The effect of fiscal policy on diet, obesity and chronic disease: a systematic review. Bulletin of the World Health Organization, 88, 609-614.