Evidence

Would the National Food Strategy’s Sugar and Salt Reformulation Tax unfairly impact on households with low incomes?

Recipe for Change is a campaign calling for a new industry levy to help make our food healthier, while raising revenue that can be invested back into children’s health. This policy briefing, written by the Food Foundation in February 2022, explores the impact of a reformulation tax on households with low incomes, based on the National Food Strategy’s recommendations.

The National Food Strategy (NFS) has recommended the introduction of a ‘Sugar and Salt Reformulation Tax’ to change fiscal incentives in the food system to better support healthy diets.
There are concerns that this tax could be inherently regressive, disproportionately affecting the living costs of lower income households. However, the current evidence base does not support this.
The tax aims to reduce consumption of processed foods high in sugar and salt, and thereby improve public health. It would primarily do so by incentivising manufacturers to reformulate their products to reduce the amount of sugar and salt they use.
Food prices would, for the most part, only increase when reformulation is not achieved. It is likely that the tax would lead to at least some increase in prices where foods are not fully reformulated. Analysis from the NFS predicts that this could amount to 16-20p per adult per day.
Because lower income groups have a smaller budget for food, any price increases would account for a higher proportion of their overall food expenditure.
However, lower income households are likely to be more responsive to price increases and therefore more likely to reduce their consumption of taxed foods to avoid having to pay more.
Furthermore, because lower income groups have higher rates of diet-related disease, the tax and subsequent price increases could have a bigger impact on improving their health.
Introducing additional measures to improve access to healthy food for people on lower incomes would further mitigate against the risk of regressivity.