Abu Dhabi, UAEThursday 25 April 2019

The arguments for a regional 'Fat Tax' carry much weight

Growth in international markets is sluggish. The local economy isn't faring much better. But in every organisation there is one place of enormous expansion - around the waistlines of workers.
Weighty option: governments can earn revenues for their citizens' excesses in the dining room.
Weighty option: governments can earn revenues for their citizens' excesses in the dining room.

Growth in international markets is sluggish. The local economy isn't faring much better. But in every organisation there is one place of enormous expansion - around the waistlines of workers. Take a look for yourself the next time you walk into any office, other than a model agency perhaps, and you'll see what I mean. Profits may be down, the workforce reduced, budgets cut - but at an individual level we're all carrying a lot more excess fat.

Finally, a growth story, and not just of premature green shoots. It must be down to the efforts of the multinational corporations who produce processed fast food, confectionery and snacks, and then distribute these products to all corners of the globe. They are the ones we should be thanking for this enlargement around our midriff. Take the sweets maker Mars, which proudly opened its new Jebel Ali factory in Dubai two weeks ago. It is expecting to produce about 50,000 tonnes of confectionery a year from this facility, which it forecasts will boost the organisation's revenues across the MENA region from US$450 million (Dh1.65 billion) last year to $1bn in 2014.

Thank you, Mars, for contributing to our personal growth. Our tailors will forever be indebted for the steady flow of adjustments that will need to be made to our clothing as we grow side by side with Mars's revenues in the region. But wait a minute … why should Mars and other companies like it in the fast food, confectionery and snacks sector take all the credit for this increase? After all, as consumers we have the freedom of choice to buy healthy, organic wholefoods, not the processed stuff that is being dished out in every food court in shopping malls across the country.

Surely their extensive physical coverage and comprehensive advertising across all media aren't swaying our opinions? Perhaps it is. We seem to place eating pleasure higher than eating healthily, which makes for a great revenue story for the fast-food, confectionery and snacks industry. Having the likes of Mars operate locally is a double-edged sword for the economy. On the one hand the setting up of a factory, distribution channels and other components in the value chain creates new jobs.

It also supports trade in adjacent industries such as logistics and marketing, as well as stamping a globally respected brand name firmly on UAE soil. But the continued profusion of fast food, confectionery and snacks that contain high sugar, salt and fat is clogging up our arterial connections and leading all of us towards a collective bout of thrombosis. Let's not forget that in the same week Mars opened its sweets factory, the UAE's Nutrition Strategy was also announced. It aims to tackle chronic and growing levels of obesity, diabetes and other "lifestyle diseases" related to unhealthy eating and lack of exercise.

The UAE has the second-highest incidence of diabetes in the world, with an estimated 24 per cent of the population over the age of 20 suffering from the disease. With the cost of treating each diabetic patient estimated to be as much as Dh15,000 a year, the annual national health bill for diabetes alone tops Dh10bn - a figure that ultimately needs financing from either the patient and/or the government.

There is, however, a simple solution. It requires the legislators to be gutsy and stand up in the face of the inevitable outcry that will come from the purveyors of fast food, confectionery and snacks: introduce a "Health Tax" or, to put it more crudely, a "Fat Tax" that taxes the profits of the companies that produce fast foods, confectionery and snacks. The resulting federal inflow could be used to finance free public sporting infrastructure for families and young people. It could be used to upgrade schools' sports facilities, some of which are in appalling condition.

Greater investment in educating the public about the benefits of healthy eating could be made. Distribution channels for alternative wholefoods could be created, which should be subsidised. In summary, the benefits of a Fat Tax could be sizeable. The US Senate finance committee is considering something similar: a 3 per cent "Soda Tax" on carbonated, sugared fizzy drinks and energy sports drinks, in part to pay for the US President Barack Obama's proposed $1 trillion universal healthcare plan.

Even recession-hit Romania is making noises about introducing a fast food tax. According to the Romanian health minister Attila Cseke: "The new tax will account for a percentage of fast-food products sales and the revenues that we will collect will be used to supplement funds needed to run health programmes and invest in system infrastructure." The companies operating in these sectors need to make money and earn a return on their shareholders' assets.

But the pursuit of unbridled profit must be balanced with the social responsibility of not burdening the economy with huge financial healthcare costs that are loaded on to citizens and governments. Rehan Khan is a business consultant and writer based in Dubai

Updated: June 6, 2010 04:00 AM

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