Taxation, Fat Tax

A fat tax is a type of excise, sumptuary, sin, and Pigovian tax. The policy involves a government surcharge placed on fattening foods, beverages, or individuals, with the aim to decrease consumer consumption of foods that are linked to the increasing health risks of obesity. Proponents of Pigovian taxes argue that prices of goods do not reflect their true social cost, which is why these fiscal interventions are a means to provide consumers with economic incentives to modify their food consumption and for governments to use the revenues for public health program funding. Studies have shown that small taxes are ineffective in directly influencing consumption habits, which is why legislatures have proposed more aggressive fat taxes to meet public health goals. Critics of fat taxes ...