New WHO fiscal policy guidelines to promote healthier diets around the globe

17 Jun 2024 --- The newly published WHO guidelines for countries provide recommendations and implementation considerations on fiscal policy to encourage healthier diets. These include a tax on F&B and food subsidies to change consumer behavior by lowering the prices of selected products at the retail level.

“Fiscal policies, including taxes and subsidies, have the potential to influence consumer and market behavior through their impact on prices and affordability of products,” says Dr. Ruediger Krech, director of the Department of Health Promotion at the WHO. “Subsidies can encourage consumption of healthy products, while taxes can discourage consumption of health-harming products and encourage industry to reformulate its products.” 

WHO points out that energy-dense and nutrient-dense foods high in fats, sugars and sodium are becoming increasingly widely available, heavily marketed and comparably cheaper in more locations around the world. 

Dr. Francesco Branca, director of the Department of Nutrition and Food Safety at the WHO, adds: “Governments around the world have begun to act — most notably by taxing sugar-sweetened beverages. Despite progress in this area, they continue to face challenges in developing fiscal policies that promote healthy diets. This guideline will be a valuable tool for WHO member states to create more health-enabling food environments at every level.”

Fiscal policy recommendations 
The key objectives of the document are to provide evidence-based guidance aimed at national and local policymakers involved in food regulation and policymaking, implementers of health and nutrition programs, and organizations advocating for fiscal policy. 

This guideline aims to be a tool for countries to create more health-enabling food environments at every level.WHO suggests the implementation of a policy to tax foods that do not contribute to a healthy diet, providing recommendation remarks to facilitate interpretation and implementation. 

In particular, the document should be interpreted in the context of other WHO guidelines on healthy diets, including those on total fat, saturated fatty acids and trans-fatty acids, polyunsaturated fatty acids, sugars, sodium, potassium, low-sodium salt substitutes, carbohydrates and non-sugar sweeteners.

The organization recommends using nutrient profile modeling to classify F&B based on their nutritional composition in relation to disease prevention and health promotion. Modeling should help define F&B to be taxed or subsidized. It should be in line with national or international dietary guidelines. 

The document highlights that the effectiveness of F&B tax policy design and implementation depends highly on nations’ internal political contexts. Yet, it also acknowledges the importance of learning from other countries’ experiences in policy implementation, including the type of tax, tax rate, taxable products, nutrient profile models and the possible substitution effects of taxation. 

The single nutrient tax — based on evidence from saturated fatty acid taxation —  may increase prices and reduce purchases of taxed products. It is likely to result in a broad range of taxable products. 

Lastly, the document addresses the most common argument against F&B taxation, which is that it is regressive. WHO explains that the argument is based entirely on the tax burden that falls on the customers, regardless of the health and economic harms of the excessive consumption of foods that do not contribute to a healthy diet.  

Additionally, concerning regressive taxation,  WHO advises that the financial impacts on low-income populations must be considered. It advises policymakers to design tax structures that encourage a shift toward healthier food options to replace options that do not contribute to a healthy diet.

Such an approach should “strike a balance” between the affordability of food items while discouraging the consumption of food options associated with adverse health outcomes.  

Taxing evidence 
The new document is based on existing evidence on the effectiveness of taxes on sugar-sweetened beverages (SSB), the effectiveness of already implemented taxes on foods or nutrients and the subsidization of foods and contextual factors.

A systematic review conducted by  WHO reveals a “large and significant” effect of SSB taxes on prices and purchases.

A systematic review conducted by the WHO reveals a “large and significant” effect of SSB taxes on prices and purchases.“Meta-analyses showed a passthrough rate — that is, the proportion of a tax that is transferred to the price paid by consumers — of 82% and that SSB taxes significantly decreased purchases of taxed beverages, with an own-price elasticity of -1.59. The own-price elasticity of  -1.59 indicates that a 10% tax-induced price increase would reduce purchases of SSBs by about 16%.”

Researchers at the University of Cambridge, UK, have found that introducing the country’s soft drinks industry levy has decreased the obesity rate among primary school students in the country. 

In Germany, researchers noted SSB taxation, similar to that implemented in the UK, could save the country billions in health care costs by improving the nation’s well-being. 

 The UK food policy charity The Food Foundation recently released a report presenting evidence on how the switch to products lower in salt and sugar affects affordability, health, healthy weight and the environment. The report looked at the consumer categories: biscuits, crackers, bread, breakfast cereals, confectionery, desserts, savory snacks and sweet spreads. 

Meanwhile, the sudden widespread availability of ultra-processed food products high in sugar, salt and fats has resulted in skyrocketing overweight and obesity in low- and middle-income nations in many regions across the world. 

By Milana Nikolova