Business Submission: Government Tax on Fast Foods Essay

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Business Submission: Government Tax on Fast Foods

Obesity, according to the WHO, refers to the accumulation of an excessive amount of fats in the body. Obesity and overweight are measured through the BMI (body mass index). The BMI measures obesity by comparing the square of a person's height to his or her weight. It is denoted as Kg/m2. A BMI that is between 25 and 29 indicates overweight. Obesity is rather serious, and is indicated by a BMI that either equals, or exceeds 30. Essentially, obesity comes about when the energy calories consumed fail to balance with those expended. This imbalance is brought about by increased use of diets with huge fat content and inadequate levels of physical activity. Obesity increases the risk of non-communicable ailments such as diabetes, heart failure, and cancer. Effective obesity-prevention would, therefore, go a long way in reducing the prevalence of such ailments.

The rates of obesity in Australia have been on a notable rise. As a matter of fact, Australia, with an adult obesity rate of 28.3%, ranks fourth in the world; after the U.S., Mexico and New Zealand. The trend is worrying, especially because the associated costs are also rising. The Australian Medical Association (AMA) has been on the forefront in supporting, and implementing campaigns aimed at reducing the rates of obesity, and ensuring a healthy population. AMA, therefore, fully supports the government's proposal to impose additional commodity taxes on fat foods.

AMA's Background

The AMA is an association of doctors, which seeks to ensure the well-being of its members, as well as their patients, through the advancement of communal health. The AMA works by either devising its own, or facilitating the implementation of federal campaigns aimed at addressing serious health concerns (Australian Medical Association, 2013). It has been vocal on the issue of obesity and overweight. The increasing rates of obesity in the country continue to be a thorn in the flesh for all stakeholders, including the AMA.

Through the famous 'shrinking the nation's waistline' agenda, the AMA has advocated for a reduction in the intake of fatty diets, and an increase in physical activity levels (Australian Medical Association, 2013). The star food ratting system and the physical activity-facilitating plan for urban development are some of the AMA's most significant obesity-prevention campaigns (Australian Medical Association, 2013). Obesity is, to a large extent, a barrier to good health. It is because of this, "and its effect as a driver of health care spending," that the same, has to be prevented. Such prevention strategies will always get a nod from the AMA (Australian Medical Association, 2013).

The Problem Statement

Since 1980, the rates of obesity, worldwide, have almost doubled (WHO, 2013). This can be attributed to the increased use of low-cost high-fat diets, and low physical activity levels. The low levels of activity mainly result from the desk-bound nature of most modern jobs (WHO, 2013). The obesity rates are, however, higher in some countries than in others. Australia has one of the highest rates of adult obesity growth (OECD, 2001, p. 54). Obese adults constituted only 11% of the total population in 1989. By 2012, however, this figure had drastically risen to 28% (ESSA, 2013). The country currently occupies the fourth position worldwide, with a significant 28.3% obese and 40% overweight population (Australian Medical Association, 2013). According to the OECD, Australia is one of those countries in which "one out of five people (men and women combined) aged 15 years and over are defined as obese" (2001, p. 54).

Financial Costs

These increasing obesity rates translate to an increase in the costs associated with the same. In 2005, for instance, the country's health system incurred direct costs of approximately $21 billion, in obesity and weight-related complications alone (Australian Medical Association, 2013). Given that the obesity rates have since gone up, then these costs will, without doubt, be even higher this year. Moreover, individuals battling obesity and overweight incur additional health care costs of approximately 30% in treatment, and boot camp programs (ESSA, 2013). These finances could otherwise be put to other revenue-generating or beneficial projects.

Health Costs

Apart from the financial burden, obesity imposes serious health complications. Obesity has been found to increase the risk of non-communicable ailments such as cardio-vascular heart disease, type two diabetes, and some forms of cancer. Obesity, in fact, accounts for 44% of the diabetes charge, between 7 and 41% of the cancer charge, and 23% the CVD burden (WHO, 2013).

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These complications are among the greatest causes of death, not only in Australia, but in the world over (WHO, 2013). In the state of Queensland alone, for instance, approximately 22,000 obesity-related deaths are reported yearly (Nutrition Australia, 2012).

Additionally, obesity imposes serious self-esteem issues. Those affected, more often than not, opt for "inspiration limited to unrealistic shows like 'The Biggest Loser', encouraging them to tame serious health risks to make a change" (ESSA, 2013).

Developments to Date

Obesity is no doubt a great barrier to good communal health and economic success. The federal government, the civil society, NGOs, and other relevant stakeholders have been at the forefront in devising strategies aimed at curbing the spread of the same.

The Star Rating System

The star rating system, which was conceptualized by the AMA, and recently approved by the relevant ministries, is one of the most significant developments in this regard (FOE, 2013). This is aimed at guiding consumer choices towards healthy diets. The nutrient content of packaged foods will be represented by star formations (FOE, 2013). A scale of 1/2 to five stars will be used; the healthier the food is, the more the number of stars (FOE, 2013).

Obesity as a Chronic Disease

The adoption of "a policy that recognizes obesity as a disease requiring a range of medical interventions" is another significant development (ESSA, 2013). The AMA adopted the same in June 2013. The move was aimed at changing the medical community's traditional handling of obesity. Moreover, such a move could see the government increase its financial support for the same (ESSA, 2013).

Organizational Unity

Other stakeholders have also played significant roles in the fight against obesity in Australia. Organizations such as 'Obesity Australia' have been key in both policy formulation, and public awareness initiatives. Organizations have come together in an attempt to improve their efficiency in the fight against obesity. A number of institutions, for instance, in September, collectively drafted a letter to Coca-Cola, asking the latter to "stop weight-washing the issue of obesity with expensive advertizing, and instead take practical steps to address the core drivers of weight gain" (Nutrition Australia, 2013).

The Queensland Collaboration

A number of health groups in Queensland have collaborated in the fight against obesity in the state (Nutrition Australia, 2012). Through a campaign dabbed 'Swap It, Don't Stop It'; the group seeks to reduce the spread of obesity by increasing public awareness on issues that seem rather small, but could go a long way in fighting obesity. These include healthy diets, and increased movement (Nutrition Australia, 2012). These instances just represent the numerous actions that have already been taken by the AMA and other stakeholders in the fight against obesity.

The Proposed Solution

The government's proposal to impose an additional commodity tax on fat foods is the newest development in the fight against obesity. A standard fat content would be determined, and then a tax would be imposed on every unit of fat that is in excess of the standard. This would translate to higher prices and reduced consumption of the same. The AMA supports the government's proposal, and recommends the adoption of a two-way approach; imposing the tax, and then using the revenues generated thereof, in subsidizing healthier foods (Sacks, 2011). This would ensure that consumers "not only stop eating the unhealthy food, but also choose the healthier foods," which are cheaper (Sacks, 2011).

Support for the Proposed Solution

Price is a major determinant of consumption. Quality, taste, etc., are also significant, but to a lower extent (Sacks, 2011). Taxes and subsidies can, therefore, be considered the best ways of either, encouraging or discouraging the consumption of a commodity. There is massive evidence on the effectiveness of these strategies (Eriksen and Whitney, 2013, p. 131). The strategy has worked on commodities such as alcohol, and tobacco (Eriksen and Whitney, 2013, p. 131). For instance, there was a significant fall in tobacco consumption in the country when the tobacco tax was imposed in 2010 (ASH Australia, 2013). BAT Australia acknowledged that the 25% tax imposed on tobacco resulted in a 10.2% fall in consumption and sales (ASH Australia, 2013). The strategy would, therefore, go a long way in the fight against fat foods, and obesity by extension.

Arguments against the Proposed Solution

The proposal, though crucial to the ongoing fight against obesity, has.....

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