Fat tax

A fat tax is a tax or surcharge that is placed upon fattening food, beverages or on overweight individuals. As an example of Pigovian taxation, a fat tax aims to discourage unhealthy diets and offset the economic costs of obesity.

A fat tax aims to decrease the consumption of foods that are linked to obesity. A related idea is to tax foods that are linked to increased risk of coronary heart disease. Numerous studies suggest that as the price of a food decreases, individuals get fatter. In fact, eating behavior may be more responsive to price increases than to nutritional education. Estimates suggest that a 1 cent per ounce tax on sugar-sweetened beverages may reduce the consumption of those beverages by 25%. However, there is also evidence that obese individuals are less responsive to changes in the price of food than normal-weight individuals.