Taxation of foods high in fat, sugar, and sodium in India: A modelling study of health and economic impacts
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Background
Consumption of foods high in fat, sugar, and sodium (HFSS) and obesity are rapidly increasing in India. Taxing HFSS foods has been proposed as one of the policy interventions to promote healthier diets globally. This study estimates the effect of this approach on nutrient intake, diet-related disease, and associated health and economic burdens in India.
Methods and findings
We use nationally representative household expenditure survey data, dietary requirements, and food composition tables to model individual nutrient intake. Consumer responsiveness to food price changes for three income terciles, captured in price elasticities, is estimated using an Almost Ideal Demand System model. Longer-term policy impacts are estimated through a novel dynamic microsimulation model, Health-GPS. Modelled policy outcomes include changes in risk exposures, disease incidence and burden, and total health expenditure. On average, 9.9% of total energy intake comes from HFSS items, based on the definition by the Food Safety and Standards Authority of India’s Labelling & Display Amendment Draft Regulations 2022. Applying the highest Goods and Services Tax (GST) rate of 40% on HFSS items is associated with a persistent average per capita decrease of 0.17kg/m 2 (95% CI: −0.17, −0.17) in body mass index and 45.8mg (95% CI: −45.9, −45.7) in daily sodium intake. Over 30 years, this could reduce annual disease incidence by up to 1.72% (95% CI: −1.78%, −1.66%) on average and prevent 0.63 million (95% CI: −0.71, −0.55) disability-adjusted life years per year from ischemic heart disease, chronic kidney disease, stroke, diabetes, and asthma, reducing total health expenditure by US$601 million (95% CI: −624, −578) per year. Further work is needed to incorporate potential benefits or harms associated with changes in other foods and nutrients that are not currently modelled, such as fruits, whole grains, fibre, and red and processed meats. Larger absolute health gains accrue to higher-income individuals, reflecting higher baseline HFSS food intake. Given substitution patterns and a price-inelastic demand, the tax change is expected to generate a 92.0% (95% CI: 88.2%, 95.7%) increase in tax revenue from foods and beverages with only a minor effect on household spending (+1.0%, 95% CI: +0.0%, +1.9%).
Conclusions
Higher taxation of HFSS foods could help mitigate rising incidence of diet-related diseases and morbidity in India, reduce healthcare costs, and serve as an additional source of revenue for the government.
