Chris Etherington

Written by: Chris Etherington

Chris Etherington

Partner

Could a 'fat' tax solve holiday hunger?

Just as the recent champion of free school meals hails from Manchester, so too does the policy itself as Manchester was the first city to offer free school meals to the neediest children back in 1879. The parallel highlights how long the debate on food security for children has raged. Many accept that the extension this summer is an appropriate step in these exceptional times, but calls remain for the issue to be resolved permanently with all-year-round support for food provided to the children who need it most.

It is reported that the amount set aside by the government for the current 'coronavirus summer food fund' is in the region of £120m. If that’s the cost for a six-week holiday period over the summer, then around £260 million would be required every year in order to provide food support during all school holidays.

That is not an insignificant sum and more difficult to fund at a time when the Treasury is facing the prospect of shrinking tax receipts. Sympathetic as he might be, the stark reality facing the Chancellor is that the books are already unbalanced, and tax increases will likely be necessary to fund existing spending commitments. How then could he fund extra food support?

One option the Chancellor could consider is the introduction of a ‘fat tax’ to generate revenues and improve the health of the nation in one fell swoop. The term ‘fat tax’ is the common reference for tax increases on foods that might be considered unhealthy, such as those high in saturated fat or sugar.

A clear criticism of a ‘fat tax’ in these circumstances is that it could be self-defeating if you are trying to address food poverty. Data shows that the poorest in society are more likely to consume those foods targeted by a ‘fat tax’, thereby making them worse off and compounding the problem.

A savvy Chancellor will recognise that the way in which a ‘fat tax’ penalises the poor confirms that an intervention on food is needed. It would be wrong to assume that unhealthy food purchases reflect personal choice if healthier options are financially out of reach. This makes the case for positive action in tax policy to resolve this.

Any ‘fat tax’ policy would require careful research to ensure an appropriate balance between redistribution of wealth and a health benefit pay-off. It would likely need to be balanced with subsidies on healthier foods and further measures introduced such as a permanent ‘holiday food fund’ to ensure the poorest in society were not left worse off.

The opportunity is there for the Chancellor to make bold choices on tax policy and the debate is there to be had.

 

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