Is a salt tax in our future?
This week, the Food and Drug Administration proposed voluntary targets for reducing sodium in American diets. Can a salt tax be far behind?
The FDA’s proposal comes as a number of jurisdictions in the US and around the world mull various forms of sugar taxes, aimed at both reducing consumption of sugary drinks and raising revenue. Of course, states have steadily increased tobacco taxes in recent years. My Tax Policy Center colleague Donald Marron has written extensively about corrective taxes in general and sugar taxes specifically. You can read more here and here.
The FDA is proposing both short-term and long-term voluntary goals for salt in a wide range of foods, including restaurant meals and prepared foods. The plan would require producers to voluntarily "target mean sodium concentrations for each food category.”
The FDA says 35 countries have established similar programs for reducing salt in food. Donald tells me that Hungary already has a salt tax and New Zealand is debating one.
The FDA leaves little doubt that it believes excess dietary salt is a bad thing. According to the documents supporting its proposed regs:
“Research shows that excess sodium consumption is a contributory factor in the development of hypertension, which is a leading cause of heart disease and stroke, the first and fifth leading causes of death in the United States, respectively…. Many expert advisory panels have concluded that scientific evidence supports the value to public health of reducing sodium intake in the general population.”
For the sake of argument, let’s stipulate that eating too much salt is a bad thing—bad for the health of individuals, bad for their families, and costly to society. Will voluntary targets succeed in reducing salt consumption? And if they don’t, should policymakers consider taking the next steps—regulatory limits or tax increases?
It is hard to imagine the US passing laws limiting the amount of salt in, say, prepared foods. And even if it did, all of us have a handy salt shaker at home to respond to those curbs.
What about a tax? By raising the price, government might encourage producers to find other herbs or spices to flavor prepared foods and substitute for high levels of salt. Yet, in contrast to, say, tobacco, humans need some salt in their diets, a requirement that can’t be met with higher levels of oregano.
Any discussion of salt taxes should include a very dark chapter in the history of such levies—the salt tax imposed by the British in India. The raj first attempted to grant a monopoly to the British East India Company on the production and sale of salt. By the early 19th century, the British had added a tax which, by some accounts, represented 10 percent of all revenues in India.
Of course, salt was not taxed in India because it was bad, but rather because it was highly prized, both as a seasoning and a preservative. It was not a corrective tax—the British were hardly worried about the health of Indians—but a revenue source and an attempt to maintain the British monopoly. By the 20th century, highly-taxed salt become unaffordable to most Indians. While India was one of the biggest producers of salt in the world, Indians could not buy it.
In 1930, Mahatma Gandhi led a march to Dandi on the Arabian Sea to protest the salt tax. It was, in some respects, the real beginning of the Indian independence movement—essentially that nation’s equivalent to the Boston tea party a century-and-a-half earlier.
Notwithstanding that history, the FDA’s proposed voluntary curbs on salt in the US raise some interesting issues and can’t help make me wonder whether a salt tax is in our future.
This article first appeared at TaxVox.
