Taxes are an integral part of our day to day lives as without taxes no government can manage its expenses, while most of you must have heard about income tax, sales tax, wealth tax and so on but there is another tax which majority of people have heard about and that is called a fat tax. Fat tax refers to that tax which is imposed on those food items which are known for increasing the obesity levels and in order to discourage people from consuming foods which increases the fat government imposes a fat tax. While it is a debatable topic as some people consider it as good due to good intentions of government while some people consider it as bad as according to them the government should not interfere with eating habits of people. Before forming an opinion about this tax you should look at the advantages and disadvantages of fat tax –
Advantages of Fat Tax
Increase in Tax Revenue of Government
One of the benefits of fat tax is that it results in an increase in the tax revenue of the government because the government in the majority of the countries have a fiscal deficit and help in increase in revenue from any source is a welcome move as far as the government of the country is concerned.
Healthy Lifestyle of People
Another indirect advantage of this tax is that since due to this tax food items which results in increasing fat become expensive and people due to high price may switch to healthy substitutes which in turn will result in healthy lifestyle of people of the country as we all know that a nation can move forward only when people of the nation are fit and healthy.
Good Use of Additional Revenue
Another benefit of this tax is that government can use this additional revenue for the benefit of the people of the country, hence government can use this additional revenue for developing infrastructure and ensuring the safety of people or government can decrease tax rates on other essential products thus giving relief to the lower and middle-income group.
Disadvantages of Fat Tax
Difficult to Identify Food Items for Tax
The biggest problem of this tax is that it is very difficult to identify the foods products appropriate for fat tax because chances of biases creeping in are higher as there is no perfect definition of fat-inducing food items and hence government may select food items eligible for fat tax randomly leaving scope of criticism of the government from the people as well as opposition political parties.
Administration Costs
Another limitation of this tax is that for any tax government has to incur costs for collection of taxes and since the fat tax will comprise of a small amount of revenue chances are government may not benefit too much from imposing this tax.
Many Causes of Obesity
Another criticism of this tax is that obesity is not caused by only eating fatty foods rather there are many factors like unhealthy lifestyle, lack of exercise, irregular eating habits which contribute to obesity and hence the argument of the government that this tax reduces the obesity of people of the country is flawed.
As one can see from the pros and cons of fat tax that imposing this tax is a tricky decision for government of the country and that is the reason why not many countries impose this tax on the people of the country.