Day 38 · Proposal 37 · Part XXII · Policy 41
37
Higher Taxation of Unhealthy Food
Change the price signal. Protect choice. Make healthier food more competitive.
Open for scrutiny — Manifesto 1.1
Proposal 37 would apply either a higher rate of VAT or a supplementary food tax to qualifying Red and, where appropriate, Amber foods under the national traffic-light system. Taxation would be calibrated according to nutritional characteristics, with the purpose of changing relative prices so healthier choices become more economically attractive. The final mechanism, rates, thresholds, exemptions and implementation timetable remain open for modelling and scrutiny.
Published Manifesto 1.1 policy. The sections below set out the proposal as published. Questions and challenges are open questions, not settled answers.
1. The core idea
Manifesto 1.1 proposes that foods classified as Red or, where appropriate, Amber under the national traffic-light system should attract either a higher rate of VAT or a supplementary food tax.
The tax would be calibrated according to nutritional characteristics. Its purpose would not simply be to raise revenue, but to change the relative price of food so healthier choices become economically attractive.
Core commitment
Use price signals to support healthier choices—with transparent rules and proper scrutiny.
2. What could attract stronger taxation
Qualifying products particularly high in the following could face the strongest taxation:
- Saturated fat
- Trans fats
- Sugar
- Salt
- Ultra-processing, where a workable and evidence-based legal definition applies
Classification is not tax treatment
Classification as Red or Amber would not automatically determine final tax treatment. Government would need to publish the qualifying criteria and thresholds.
3. Two possible tax routes
- Higher rate of VAT: Use the existing VAT framework to apply a higher rate to qualifying products. Government would still need to define the rate, product scope, classification rules and treatment across retail, hospitality, online sales and imports.
- Supplementary food tax: Create a targeted levy calibrated according to nutritional characteristics. Government would need to decide who pays, where liability arises, how rates are calculated and how the system is inspected and enforced.
Principle
The source proposes alternatives. It does not settle the final tax mechanism or rate.
4. Design choices government must resolve
- Product scope
- Nutritional thresholds and bands
- Tax rates
- Point of liability
- Exemptions
- Review and appeal arrangements
Open for scrutiny
No tax rate, threshold, exemption or implementation date has yet been decided.
5. Protecting households and avoiding distortion
Poor tax design could increase household costs, reward technical loopholes or shift consumption towards other unhealthy products.
- Household effects: Publish the expected effects on low-income households, families and people with restricted diets.
- Healthier substitutes: Test whether affordable and healthier substitutes are genuinely available.
- Policy 42: Consider the interaction with Policy 42’s proposed healthy-food subsidy.
- Reformulation: Assess whether manufacturers are encouraged to reduce harmful ingredients.
- Fair comparison: Compare like products fairly and address portion sizes, staples and specialist foods.
- Compliance: Keep compliance proportionate while preventing avoidance and deliberate misclassification.
- Consistent rules: Establish consistent rules for imported goods, online sales, restaurants and takeaways.
6. Measuring whether it works
- Relative prices: Changes in the relative prices of healthier and less healthy products.
- Purchasing: Changes in purchasing and consumption.
- Substitution: Substitution between product categories.
- Reformulation: Manufacturer reformulation.
- Reclassification: Movement between traffic-light classifications.
- Inequalities: Effects on health inequalities and household budgets.
- Alternatives: Access to affordable alternatives.
- Net revenue: Revenue compared with administration, enforcement and compliance costs.
- Distortion: Avoidance, market distortion and unintended consequences.
Principle
Make healthier choices relatively more affordable—not raise revenue for its own sake.
7. Questions for scrutiny
- 01Which Red products should qualify, and when—if ever—should Amber foods be taxed?
- 02Should government use higher VAT, a supplementary food tax or a carefully defined combination?
- 03How should nutritional characteristics be weighted and thresholds set across product categories?
- 04How should ultra-processed food be defined clearly enough for taxation and enforcement?
- 05What rates would change behaviour without placing disproportionate pressure on household budgets?
- 06How should low-income households and people with restricted or specialist diets be protected?
- 07Which exemptions, if any, are justified for staples, medical foods or small producers?
- 08At what point in the supply chain should the tax arise, and who should be legally liable?
- 09How should imports, online sales, hospitality, restaurants and takeaways be treated?
- 10How can reformulation be encouraged while preventing gaming, substitution or misleading claims?
- 11What inspection, reporting, appeals and penalties would make the system credible?
- 12Which outcomes should trigger revision, expansion, suspension or withdrawal of the policy?
8. The proposed direction
Proposal 37 would apply either a higher rate of VAT or a supplementary food tax to qualifying Red and, where appropriate, Amber foods under the national traffic-light system.
The strongest treatment could apply to ultra-processed foods and products particularly high in saturated fat, trans fats, sugar or salt where they meet the relevant criteria.
Before implementation, government must publish the proposed mechanism, product scope, thresholds, rates, exemptions, distributional and equality assessment, administrative model, enforcement plan and review criteria.
Core purpose
Change the relative price of food so healthier choices become economically attractive.
Source basis: Manifesto 1.1, Part XXII, Policy 41, ‘Higher Taxation of Unhealthy Food’. The source proposes either a higher VAT rate or a supplementary food tax for qualifying Red and, where appropriate, Amber foods, calibrated by nutritional characteristics. It does not specify rates, thresholds, exemptions, the liable point, implementation dates or a final tax mechanism; these remain open for modelling and scrutiny.
Read. Question. Challenge. Improve.
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