Analyzing the potential impact of food taxes and subsidies on obesity in Malta

Abstract

The detrimental impact of an unhealthy diet on health and consequently, a nation’s finances, has been known for a long time. To address the obesity pandemic, policymakers may opt to tax unhealthy foods and subsidise healthy foods. Although subsidisation can be costly, levying taxes can be very regressive. Through mathematical modelling, this research analyses the potential impact of food taxes and subsidies on obesity rates in Malta. The focus is placed on the possible Body Mass Index category and weight changes. A sensitivity analysis is also carried out to assess the robustness of the main results. This study finds that a fat and sugar tax of 30% coupled with a fruit and vegetable subsidy of 10% can potentially lead to around 26.5% of the Maltese population experiencing weight loss greater than 1 kg, and an impact of 1.6% on local obesity rates. A 20% tax and subsidy rate can potentially lead to weight gain amongst 19.03% of the population and an adverse impact of 1% on local obesity rates. The impact varies by gender, age and income/education status. These results imply that if carefully enacted, the levying of food taxes and subsidies combined with other policies to manage behavioural biases may help to address the prevalence of obesity.