New modelling shows a 20% tax on unhealthy foods could be seven times more effective than taxing soft drinks alone.
A simple 20% tax on unhealthy foods could avert 212,000 premature deaths and save AU$15 billion in healthcare costs over the lifetime of current adult population, according to new modelling from The George Institute for Global Health.
The study, led by Tazman Davies and published in The Lancet Public Health, is the most comprehensive modelling of food tax and subsidy policies ever conducted for Australia. It uses Australian-specific food purchasing data and accounts for differences across income groups, making it a substantial advance on previous studies.
The research modelled a 20% tax on unhealthy categories - including soft drinks, confectionery, biscuits, pastries, ice cream, and processed meat - as well as a scenario where the revenue generated is used to subsidise fruits and vegetables.
A tax with large-scale health gains
Compared with taxing sugary drinks alone-an approach strongly endorsed by the WHO -extending these taxes to include additional junk food categories could deliver up to seven times the health benefits. This could mean 800 000 fewer cases of cardiovascular disease and 660 000 fewer cases of type 2 diabetes.
Better health outcomes for those who need it most
While the average Australian would pay an additional $140 in tax each year, the policy is designed with equity in mind: the health benefits would be greatest for low-income Australians, who bear a disproportionate burden of diet-related disease. In this sense, the tax is not just a revenue measure: it's a health equity intervention.
"Taxes can be powerful levers to promote health and equity," said lead researcher Tazman Davies. "Australia's tax on tobacco drove down smoking rates, and we could do the same for unhealthy foods. Countries such as Colombia and Mexico have already started taxing unhealthy foods."
Fruit and vegetables subsidy also delivers
Using the tax revenue to subsidise fruits and vegetables could lower the price of fruits and vegetables by around 20%, prevent a further 191,000 cases of type 2 diabetes and save a further 45,000 lives. Thus, a combined tax-subsidy policy could be a powerful strategy to empower many Australians to purchase healthier foods.
Context and urgency
Australia currently has no nationwide food taxes aimed at diet quality. Two-thirds of Australian adults are overweight or obese. Just 4% of adults eat the recommended amount of fruit and vegetables. The research notes that strategic food taxes and subsidies could deliver very large health and economic benefits in Australia. The study's authors call for the community, peak medical associations, and policymakers to consider adopting food taxes and subsidies as part of a comprehensive nutrition strategy.
About the research
Previous research highlights how sensitive Australians are to changes in price (e.g., a 20% price hike decreases demand by 15% - 25%). Using this data, this model simulated how taxes and subsidies could change what foods Australians buy, and then estimated the knock-on effects on weight, blood pressure, and chronic disease over the lifetime of the current Australian population.
