Page 1 of 4

Rihaab Tajmohamed 11R

EconHL: Mr.Elder

Fighting fat with Tax

Definitions.
Tax:

-Is an involuntary fee focused

on individuals or corpora8ons

that is enforced by a level of

government in order to nance

government ac8vi8es.
Subsidy:

-When the government pays the

suppliers to supply goods/

services at a lower price; with

the inten8on of increasing the

demand of a merit good-

making the merit good available

to low income ci8zens as well.

This usually occurs when there

is an excess demand and a

shortage of supplies.
Consumers:

-Is a person/group who

purchases goods/services that is

demanded in the market/

society.

In the past three years countries such as Denmark, UK, Mexico and others
has introduced imposing tax into unhealthy foods and beverages with the inten8on
of reducing the intake of unhealthy food and beverages; as well as decreasing the
obesity and heart diseases caused by unhealthy diets. As such, Denmark has
imposed tax on fats in food in 2011 (as shown in g.i).

Fig.i
Tax imposed on fat foods.

From g.i we no8ce that Denmark has imposed tax on fat foods has caused a
change in Price to increase from Pe to Pe (tax) and a change in Quan8ty demanded
of the faUy foods has decreased from Qe to Qe(tax). This shows how imposing tax
on faUy foods will eventually decrease the intake of faUy foods as well as decreasing
the risks of obesity and other diseases. Similarly, Mexico imposed tax on Soda in
2013 (as shown in g.ii).

Producers:

-Is a person/group who

supplies goods/services that are

protable to themselves.

Fig.ii
Tax imposed on Soda.

From g.ii we no8ce that Mexico has imposed tax on Soda has caused a change in
Price to increase from Pe to Pe (tax) and a change in Quan8ty demanded of sugary
beverages has decreased from Qe to Qe(tax). This shows how imposing tax on
sugary beverages such as soda will eventually decrease the intake of sugary
beverages as well as decreasing the risks of high sugar levels and other diseases.


Addi8onally, while Mexico and Denmark have imposed tax on unhealthy diets
(foods and/or beverages) they have also subsidised on vegetables and fruits ( (as
shown in g.iii). The inten8on of subsiding on vegetables and fruits besides from
being merit goods is to encourage people to intake healthy foods instead of
feeding on unhealthy foods.

Page 2 of 4

Rihaab Tajmohamed 11R

EconHL: Mr.Elder

Fig.iii
Subsidy on fruits and vegetables.

From g.iii we no8ce that Denmark and Mexico has subsidise on fruits and vegetables that caused a
change in Price to decrease from Pe to Pe (sub) and a change in Quan8ty demanded of the fruits and
vegetables has increased from Qe to Qe(tax). This shows that since the prices of unhealthy foods and
beverages have increased less people will intake unhealthy diets and more people will intake healthy
diets such as fruits and vegetables as the prices of these goods are much lower. And therefore, reduces
risks of diseases and encourages a healthy diet for people to adjust to in their lives.

In evalua8on, these measures only occur in ceteris paribus; in reality we are unable to measure
the changes of only one variable by keeping other variables constant.

In conclusion, we can conclude that imposi8on of tax in harmful goods can benet the society
in a posi8ve way; in this case encouraging healthy diets as well as reducing risks of unhealthy foods and
beverages. Although, it is impossible to eliminate the intake of unhealthy foods and diets to some
groups of people as they are able to aord the increase of the goods price, however the presents of tax
has managed to decrease the amount of people from suering diseases that are caused by unhealthy
diets. Therefore, by imposing tax on harmful goods and subsiding on useful goods like fruits and
vegetables in this case does decreases the intake of harmful goods by a large percentage.

Page 3 of 4

Rihaab Tajmohamed 11R

EconHL: Mr.Elder

Bibliography

"Sustainable Food Trust." Sustainable Food Trust Figh8ng Fat with Tax Comments. Web. 20 Jan. 2015. <hUp://
sustainablefoodtrust.org/ar8cles/gh8ng-fat-with-tax/>.

Page 4 of 4

Rihaab Tajmohamed 11R

EconHL: Mr.Elder