Hungary Tries a Dash of Taxes to Promote Healthier Eating Habits

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BUDAPEST -- Gizella Beres Devenyi, who works behind the cash register at the delicatessen Zena in a working-class neighborhood here, says it is easy to see Hungary's new salt tax at work.

"You see the kids come in after school and pick up the bags of potato chips, and then when we tell them the price, they put them right back," Mrs. Devenyi said. "We are selling about 10 percent less of certain brands."

While Mayor Michael R. Bloomberg has raised tobacco taxes and tried to ban 32-ounce sodas in New York City, neither he nor the rest of the United States has embraced taxes as a way to promote healthier diets. Europe, on the other hand, has become something of a petri dish for a variety of food tax strategies, with a handful of countries slapping taxes on items like sugary sodas, fatty cheeses and salty chips, and others considering it.

France, Finland, Denmark, Britain, Ireland and Romania have all either instituted food taxes or have been talking about it.

But perhaps no country is trying harder than Hungary, which has, in the past 18 months, imposed taxes on salt, sugar and the ingredients in energy drinks, hoping both to raise revenues and force those who are eating unhealthy foods to pay a little more toward the country's underfinanced health system.

Visit the market halls of Budapest and it is not hard to see why. Sure, there are some vegetables. But they are far outnumbered by sweet pastries, fatty sausages and thick slabs of lard, eaten for breakfast with onions. Nearly two-thirds of Hungarians are overweight or obese, and the country has the highest per capita salt consumption in the European Union.

As a result, Hungary has one of the lowest life expectancy rates at birth in the European Union: in 2011 it was just 71.2 years for men and 78.7 for women. In 2009, the most recent statistics available for all 27 members of the bloc, life expectancy in the group averaged at 76.6 years for men and 82.6 years for women.

"We have a public health crisis," said Miklos Szocska, the health minister, explaining the logic behind the new taxes, which raised about $77.8 million last year. "We are leading the charts in many kinds of diseases. So, those who follow a certain lifestyle should pay for it in a small way."

Many nutrition experts say that taxation is a powerful tool that has been effective in campaigns to reduce smoking and alcohol consumption. But many questions remain about how to make it work when it comes to changing eating habits.

Should taxation be combined with subsidies making fruits, vegetables and lean meat especially cheap? Will it actually improve diet or simply change it? And who will be affected? The truly overweight? Or the poor?

"What you have is a search out there for the best mix of ways to alter behavior," said Dr. João Breda, the program manager for nutrition, physical activity and obesity at the World Health Organization Regional Office for Europe, which will issue a report on the subject soon. "And you have it coming from governments of all kinds, governments from left to right to center."

But critics point out that the new interest in food taxes just happens to coincide with tough economic times in Europe. Some say the taxes are as much about raising revenues in a politically acceptable manner as they are about promoting healthy habits. And they worry that the taxes do, in fact, hit the poor the hardest.

One effort to raise taxes on saturated fat has already failed spectacularly. In October 2011, Denmark became the first country to institute such a tax, raising the price of meat, dairy, edible oils and fats, margarine and other blended spreads, among other items. Fans of the effort thought Denmark was perfectly positioned to make such a tax work, because it already had rigorous labeling requirements, an efficient administration and companies used to making these kinds of adjustments.

But barely a year later, Denmark gave up on the tax. In the end, experts say, the effort was undermined by political battles, pressure from the food industry and a population that quickly learned to go over the border to Germany to buy the products it wanted.

Yet many health officials say that even the failed attempts are a step forward in developing taxation strategies that will alter eating patterns on a continent that has had a rise in obesity rates in recent years, though they still run far below those in the United States.

In the United States, much of the push for healthier diets has come through awareness campaigns. The first lady, Michelle Obama, has taken up the cause of healthy eating, and in recent years, helped along by some federal incentives, many schools have taken a hard look at the lunches they serve.

But probably the most controversial champion of good eating has been Mr. Bloomberg, whose efforts in New York City have made him kind of a celebrity in Europe. He has banned trans fats, forced soda from school vending machines, demanded that restaurant chains post calorie counts and more recently tried to limit the size of sugary sodas sold at the city's restaurants, street carts and movie theaters. That effort is currently facing a challenge in the courts from the American beverage industry.

Europe is much more accepting of government intervention. Before the new taxes were imposed in Hungary, some polls showed that Hungarians were in favor of using taxes to press for healthier eating habits. But many appear to have soured on the idea, seeing it as yet another hardship in difficult times.

The move to institute food taxes in Hungary began ambitiously. It was first nicknamed the "hamburger tax" and included the idea of a tax on fast food. But the effort was later renamed a "chips tax," skirting the issue of fat altogether, a change that many people attribute to lobbying by multinational corporations. And in the end, the taxes were applied only to packaged foods, making it easier to carry out. The rates vary depending on the food group: adding, for instance, about 13 cents to the cost of a 100-gram, or nearly 4-ounce, chocolate bar, or about 20 cents to a small bag of potato chips.

But many Hungarians just do not think the taxes are working and see the effort primarily as a revenue-raising instrument, instituted after the conservative government introduced a flat-rate income tax, which created a large hole in the budget.

The teenagers in Mrs. Devenyi's shop may have given up on the expensive potato chips, but they have not been asking for apples either. For the most part, they are choosing similar snacks that are cheaper, either because they have less salt or because they were made with even cheaper ingredients.

"The food tax," Mrs. Devenyi said, "is a joke."

Sales of salty and sugary foods have dropped in the last year, officials said. But it is hard to tell if the taxes had much to do with it. Hungarians, struggling with high unemployment and a dismal economy, bought less of all kinds of foods last year.

Masek Lajor, who has a stand in the market hall of Rakoczi Square, said most of his customers were not particularly aware of the special taxes on products like powdered soup mixes, jams and chocolate, because the government had raised sales taxes at roughly the same time, making many purchases more expensive. Mr. Lajor used to sell only chicken. But he said he had to expand his inventory because Hungarians just could not afford as much chicken these days. He has loaded up on items that are near their expiration date and, at reduced prices, sell briskly.

"Everyone is just looking for bargains," he said.

The government hoped to collect 20 billion forints, about $88 million, from the food taxes last year and fell 3 billion forints, or about $13 million, short. One reason was that energy drink makers quickly changed their products to duck the tax. In a kind of cat and mouse game, the government has reformulated its tax to catch up with them and hopes to collect more money next year.

But experts say reformulation is one of the goals of the food tax. If a manufacturer lowers salt content to dodge taxes, for example, much has been achieved. It is yet another way in which food taxation is different from taxes on tobacco and alcohol.

Hungary's food industry, however, does not believe the government is interested in reformulation because they were given little time to adjust to the taxes.

"The industry was shocked," said Reka Szollosi, the secretary of Hungary's Association of Food Producers. "There was practically no consultation before they decided on these taxes. And taking salt out of a product can have serious technical consequences. In many cases, it serves as a preservative."

Ms. Szollosi says that much of the salt that Hungarians consume is not actually from prepackaged foods but from salt added to food cooked at home. She said the taxes actually sent the wrong signal, suggesting to people they could significantly affect salt intake by simply avoiding the taxed items.

"People are not aware," she said. "So, now they are saying to themselves, 'O.K., I don't eat chips, I'm O.K.,' and that just isn't true."

Michael M. Grynbaum contributed reporting from New York, and Gabriella Horn from Budapest.

world

This article originally appeared in The New York Times.


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