Proposed unhealthy foods tax misses target

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By Leith van Onselen

Melbourne researchers have released a paper calling for the government to tax foods high in sugar, salt and saturated fats, while subsidising fruits and vegetables. From ABC News:

In an article to be published in the PLOS (Public Library of Science) Magazine, modelling by the university’s Centre for Public Health Policy concludes that taxing foods that are high in sugar, salt and saturated fats — as well as subsidising fruit and vegetables — would also save $3.4 billion in healthcare costs.

“The study suggests that taxes and subsidies on foods and beverages can potentially be combined to achieve substantial improvements in population health and cost savings to the health sector,” the article reads.

“The modelling illustrates the potentially large benefits of combining food taxes and subsidies for improving population health and reducing health sector spending.”

It said a sugar tax alone would add 1.2 years to the life of an average Australian, while a combination of taxes and subsidies would mean people lived 2.1 years longer…

Under the modelling, foods were taxed based on the units of sugar, the units of saturated fats and the units of salt they contained.

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While I have previously supported a tax on sugary drinks (with some qualifications), the above formula table is ridiculous.

The evidence supporting the view that saturated fat is harmful is sketchy at best.

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The latest science shows that LDL – the so-called “bad cholesterol” which is raised by eating saturated fat – is a useless measure on its own. Rather, what is most important is the composition of LDL particles (i.e. small dense LDL particles are dangerous whereas large fluffy ones are benign), the level of triglycerides in the blood (the lower the better), and the level of HDL – the so-called “good cholesterol” (the higher the better). Dr Peter Brukner has a good explanation of what to look out for here and here.

The latest evidence shows that consuming saturated fats, in the absence of high carbohydrates, improves the cholesterol profile, namely by:

  • Lowering blood triglycerides (good);
  • Raising HDL (good);
  • Raising LDL, but changing the profile from small dense to large and fluffy (good); and
  • Raising total cholesterol (indifferent).
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In fact, 25 separate randomised control trials comparing a low-carb, high fat (LCHF) diets against high-carb, low fat diets shows the LCHF dieters having 3.5 times better health outcomes than low fat dieters with more improved cholesterol profiles, better blood sugar control and lower blood pressure. Download the comparison spreadsheet for yourself here.

The fact is that the link between saturated fat, cholesterol and heart disease was only ever a hypothesis and was never proven, and more and more scientists are coming-out against the standard dietary guidelines.

Moreover, because saturated fats are the most stable and heat resistant, they are the most appropriate (least carcinogenic) oil to use for cooking:

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Are we seriously going to start taxing the below jar of virgin coconut oil to kingdom come because it is almost pure (94%) saturated fat and supposedly unhealthy?

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And are we going to start levying massive taxes on natural salted butter, thereby encouraging people to instead consume highly processed margarine that is chock-full of inflammatory omega-6 polyunsaturated oils?

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I could make similar arguments about the war on salt.

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Rather than blindly taxing sub-components of macro-nutrients, Australia’s academics should focus on encouraging Australians to avoid packaged and processed foods in favour of a natural whole foods diet.

A good start would be to overhaul the Government’s farcical Health Star Ratings system.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.