Title: Fiscal INCentives for Health improvement: repurposing consumption taxes on food (FINCH)
Funder: Department of Health and Social Care

Abstract: Eating foods rich in fat, sugar and salt makes people more likely to have obesity and long-lasting diseases such as diabetes and heart disease. In the UK, those foods are eaten more often by people who live in poorer areas of the country, who are also more often in poor health and live shorter lives. Many cheap foods are rich in fat, sugar and salt, while healthy foods, such as fruit and vegetables, are sometimes more expensive and take more time to prepare. More and more people are affected by obesity in the UK, especially in poor areas, and the government is considering new ways to stop its spread. _x000D_ _x000D_ The government introduced a tax on sugary drinks in the UK in 2018. To avoid the tax, many of the companies that produce those drinks cut their sugar content. In some cases, sugary drinks have also become more expensive to buy because of the tax, and people are buying less of them. But the tax is small, and it is applied only on sugary drinks, so the benefits for people’s health are also small. People already pay tax on food and drinks, at much higher levels than the sugary drinks tax, but most tax on food is not related to health. For example, you pay tax on takeaways but not on food in shops such as meat and vegetables._x000D_ _x000D_ This research project will look at how tax on food and drinks can be changed to make it less expensive for people to buy foods and drinks that are better for their health, so that they become less likely to have obesity and long-lasting diseases. We will look at how taxes on different foods and drinks would change how expensive shopping would be for people, and we will work with the public, the government, food companies and shops to understand how changes in the way food is taxed will impact everyone. It is important that people and families, especially poor ones, should not pay more tax than they do now._x000D_ _x000D_ The project will make use of tools for choosing the foods that should be taxed, similar to the ‘traffic light’ labels that can be found on the packages of many foods sold in shops. We will propose different ways of taxing healthy and less healthy foods and will calculate how food companies will change their products and how people will change their food choices because of the tax changes. The project team will discuss these proposals with the public, the government, food companies and shops to decide which ideas to test, before using computer programs to calculate how people will change their behaviour if these taxes were used by the government, how much people’s health would improve, and how much this would cost.

Lay abstract: The central research question in FINCH is whether indirect taxes on food and non-alcoholic beverages (FNABs) can be repurposed and restructured to create incentives for healthy food consumption, without increasing the tax burden on households and without adverse distributional impacts relative to the current taxation system._x000D_ _x000D_ Successful international experiences with taxes applied to sugar-sweetened beverages and selected foods show that taxes can provide incentives for both consumers and food manufacturers in the direction of healthier food production and consumption. However, for taxes to have a meaningful impact on overall diet quality and health outcomes, a much wider range of FNABs need to be targeted and a more sophisticated design needs to be adopted to strengthen incentives and prevent unwarranted substitutions. Nutrient profiling models today can support the design of effective FNAB taxes and subsidies in line with dietary guidelines and improved health outcomes. _x000D_ _x000D_ Building on a collaboration with PHE (Public Health England, now Office for Health Improvement and Disparities) and leveraging inputs from a wide range of stakeholders, the FINCH project aims at:_x000D_ _x000D_ a. Developing a new research infrastructure for the ex-ante analysis of the impacts of FNAB fiscal policy scenarios, in the form of unique data and policy modelling resources that will be made available for public use;_x000D_ _x000D_ b. Undertaking a systematic review of price elasticity data and new analysis of the relationship between food prices, consumer behaviour and diet quality, based on LCF data;_x000D_ _x000D_ c. Designing and estimating the impacts of alternative FNAB fiscal policy scenarios on: (i) household FNAB expenditure and disposable income; (ii) individual dietary intakes; (iii) diet-related morbidity, mortality and quality-adjusted life expectancy; and, (iv) indirect tax revenues, tax administration and compliance costs._x000D_ _x000D_ The project plan is structured into five Work Streams (WSs), including an overarching PPI, stakeholder engagement and dissemination WS, along with four research WSs closely reflecting individual objectives of the project. Over a period of three years, the project team will engage with relevant stakeholders, including the general public; consolidate the research infrastructure required to evaluate fiscal policy scenarios by statistically matching the Living Costs and Food survey (LCF) and the National Diet and Nutrition Survey (NDNS), and by enhancing and extending the policy simulation models UKMOD (Essex) and Health-GPS (Imperial), before making these resources available for wider use; systematically review and assess existing evidence of FNAB price elasticities in order to identify relevant price elasticity values for the design and simulation of a set of fiscal policy scenarios that would promote changes in consumer FNAB choices as well as FNAB reformulation by manufacturers; feed findings back to stakeholders and to the research community for validation and identification of potential implementation barriers. _x000D_ _x000D_ The project will deliver new resources and analyses that are expected to stimulate further research, inform the public debate on the use of fiscal measures to incentivise healthy food consumption and production, and contribute to a radical rethink of the objectives of indirect taxation in the FNAB sector, given the detrimental health and environmental impacts of current dietary patterns in the UK.

Research activity codes: 8.3 POLICY, ETHICS AND RESEARCH GOVERNANCE
Health categories: CANCER AND NEOPLASMS;CARDIOVASCULAR;METABOLIC AND ENDOCRINE;ORAL AND GASTROINTESTINAL;STROKE