‘Sin taxes’ – all stick, no carrot

  • Posted on 18.01.2017

‘Sin taxes’ – all stick, no carrot


Gary Finnegan

Health Journalist


Shouldn’t we be rewarded for healthy behaviour rather than repeatedly punished for being ‘bad’?

Fat tax and sugar tax, duty on cigarettes and vodka – everyone can think of a ‘sin tax’ they pay from time to time. These are the penalties we pay for making unhealthy choices.

The idea of sin taxes has been gaining ground in recent years. The success of price rises on cigarettes and alcohol in curbing consumption is leading governments to consider what other disease-causing products could be taxed out of existence.

In Europe, Denmark were the early movers: they introduced a tax on fatty foods in 2011. It applied to meat, dairy products, oils and certain other foods which contained more than 2.3% of saturated fat.

The tax ‘worked’ in that it raised revenue and cut consumption of fatty foods by 4%. However, the policy didn’t last long. It was scrapped within 18 months because the government said the tax was too difficult and expensive to collect.

Japan is taking a different route. Instead of hitting shoppers in the pocket to reduce the size of their gut, authorities impose fines on employers and local governments who fail to keep waistlines in check.

Other countries, including the UK and Ireland have targeted sugary drinks by proposing a ‘soda tax’ to nudge consumers into making healthier choices. Celebrity chef Jamie Oliver – a campaigner for healthy eating – hailed the move as a victory for children’s health.

He was so happy about the new tax that he did a little dance at the end of a TV interview which was captured by BBC!

 There’s no doubt that taxes can be used to push people into making ‘better’ choices. But what ever happened to incentives for positive change?

GPs in the UK get bonuses if they hit certain targets – like reducing the blood pressure of their patients or keeping people out of the hospital system. This makes sense. Rather than having to pay to care for a stroke patient, the government uses the money to promote prevention.

There are other tools available to policymakers. New Zealand provides free fruit to school children. Ireland gives tax refunds if you cycle to work instead of driving.

Governments could offer vouchers for healthy foods or provide discounted gym membership. Or even reward patients with cash and gifts if they hit certain measurable health targets – like quitting smoking, reducing their waistline or completing a training programme.

Data deal

Perhaps the most intriguing – and, to some, frightening – possibility lies in the private health insurance sector. Insurance companies understand risk better than everyone else.

They get the relationship between various risk factors and health outcomes, and they would rather not pay more than is absolutely necessary for their customers’ healthcare. From that perspective, rewarding healthy behaviour is an investment.

Until very recently, their problem was that getting information on the health of their customers was very difficult. But technology is changing that.

Smartphone apps can count your steps, wearable monitors track year heart rate, and new sensor technology can easily extract all kinds of biomedical information like cholesterol or blood glucose levels.

The new generation of fitness equipment, consumer goods and medical devices are all packed with sensors and capable of communicating data wirelessly.

So here is the big question: would you grant an insurer access to this wealth of data in return for cheaper premiums?

Think about it carefully. This is your private health information which, if things go awry, could actually be used against you.

But on the plus side, if the system is well-designed, you could get big discounts by giving up smoking, eating less sugar or exercising regularly – and the evidence would be seamlessly communicated to the insurer as proof that you were keeping your side of the bargain.

It is already happening. A company in New York is so serious about this brave new world that they have provided customers with an activity tracker for free and gave them $1 rewards if they hit their health goals. Customers could claim up to $250 in Amazon vouchers if they keep fit! Similarly, a UK firm is offering discounts as well as free coffee and cinema tickets to customers who stay active.

Of course, there are data security issues to be worked out but this could be our future. There’s no reason to expect it to be confined to the private sector; governments could take the same approach to curbing the obesity epidemic that threatens to cost billions for decades to come.

And maybe – rather than relying on penalties – this will become the kind of incentive we need to get off the couch!

Imagine the smartphone calendar reminder: ‘Go for a run or it will cost you €2.35’.

Keeping your New Year’s Resolutions may soon be measured, monitored and incentivised. 

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