Chocolate tax - they wouldn’t, would they?

I don’t want to underestimate the dangers of obesity – there are clearly significant social costs associated with it such as extra cost to the NHS of treating conditions caused by it, as well as private costs for the individual – but I know I am not the only person feeling some horror at the idea of a new ‘sin’ tax on chocolate! I do not consider myself a chocaholic, but I admit that I do indulge in chocolate from time to time. Judging from the responses on TV and radio programmes yesterday I’m not alone in thinking this might be a step too far, and I think there could be a need to persuade the government that they should not consider such a move, by making the economic case against tax on chocolate. This is what I have come up with so far – I am sure there are other points that you could add…..

• As with any other indirect tax on consumption, the tax would be regressive, hitting those on low incomes harder than those in the upper income brackets.

• The government already earn VAT on sales of chocolate, which would be reduced if sales dropped, therefore offsetting the revenue gain for the Treasury.

• A Mars bar costs around 45pence – it may take a very high tax rate to be added to this to make a significant difference to the consumer’s decision to buy.

• Cadbury and Thorntons are actually reporting increased profits at the moment, as one of the few ‘good news’ stories in the recession – it seems unfortunate to punish them with a new tax at this point

• There would be a potential negative impact on countries exporting the cacao bean, such as Ghana, if demand for the product that they have been encouraged to invest in so that they can feed the demand from chocolate-eating nations. This could have a severe effect on a number of developing economies.

• And finally - I consider that there are significant positive externalities for my students from my chocolate consumption, as it may sweeten my mood as I mark their timed essays and write their reports!

Any other suggestions?

Some reading:

Chocolate may cut obesity risk

Tax chocolate to beat obesity (The Mirror)

Guardian Poll - should we tax chocolate?