# 6. Policy discussion

The adoption of tax and pricing policies to discourage the consumption of ultra-processed foods and beverages (making resources available to strengthen health promotion) has been proposed in the context of Brazil’s ongoing efforts to introduce broader tax reforms. The NUPENS NOVA food classification system, developed at the University of São Paulo, can be used as the basis for these policies, and is increasingly being applied globally through both research and to reduce NCDs, overweight, and obesity, and resulting morbidity and mortality. While the NOVA classification requires regulatory specifications to enable its application through fiscal policy, it can offer several advantages in providing a more holistic approach to nutrition promotion. Evidence also indicates that this approach may more accurately and effectively target the association between foods and health outcomes when compared to single-nutrient-based taxes (e.g., targeting sugar, sodium, or fat content) (Leonie et al., 2022).

This paper contributes to this policy discussion through results demonstrating that processed and ultraprocessed food taxes in Brazil can have a progressive effect in terms of: (i) changes in product expenditure, (ii) changes in medical expenditure; and (iii) changes in years of life lost. Our findings suggest that processed and ultra-processed food taxation would benefit households at the lower end of the consumption distribution, contributing to reduce the prevalence of diet-related health issues and decreasing medical expenditure, particularly among households reliant on the public health system.

Consumption data indicates that there may be a narrowing window of opportunity to harness the potential progressiveness of processed and ultra-processed food taxes in Brazil. While currently, urban, wealthier, and more educated population groups in Brazil consume a higher proportion of ultra-processed food groups relative to minimally processed/in natura food groups, increasing consumption of ultraprocessed foods by rural, poorer, and less educated population groups over the last decade is reducing this gap in consumption profiles (Louzada et al., 2022). This indicates that Brazil could follow the path of more industrialized countries, increasing inequities in the burden of NCDs and negative health outcomes. There is already a strong link between inequity and malnutrition in Brazil, pointing to the need for holistic policies to address the dual challenge of undernutrition and overweight/obesity. In 2021, 29% of Brazilian households reported being unable to afford healthy or nutritious food, with higher proportions among households headed by women (35.9%), by people with lower education (38.9%) and by low-income families (51%) (World Bank, 2022).

In this context, progressive taxes based on industrial processing categories can be part of a broader policy menu to improve nutrition and reduce nutritional inequities in Brazil. Other important policy initiatives that can be part of this approach include, for example (i) reformulating the contents of the Basic Food Basket according to the Food Guide for the Brazilian Population; (ii) introduction of incentives for the production and expansion in the supply of healthy foods, including through the promotion of more sustainable forms of agriculture or subsidies for in-natura foods for low-income groups; and (iii) monitoring food prices and changes in the population's consumption profile. This set of actions is in line with the international recommendations of the World Health Organization (WHO), the Pan American Health Organization (PAHO) and the World Bank.

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