Part of the Food Policy Snapshot Series
Policy name: Public Health Product Tax
Population: 9.9 million
Food policy category: Preventative healthcare
- Encourage Hungarians to eat healthier foods
- Encourage food manufacturers to make their products healthier
- Create revenue for health care system, specifically to address diet-related diseases
- Analysts first collected data to be used in crafting the policy; they quantified levels of salt, sugar and other unhealthy ingredients in foods
- Analysts also collected data on the consumption of foods high in salt and sugar to establish a baseline to compare to later
- The tax went into effect in 2011
How it works
The public health tax is an excise tax (paid when an item is purchased). The amount of tax paid is determined by the units of product bought or sold, and units are measured in kilograms or liters.
The public health tax applies to non-staple pre-packaged foods which cross a certain threshold for salt, sugar and methyl-xanthine content. It includes the following items: pre-packaged sweetened products, including candy, chocolates, baked goods, and biscuits; fruit jams and other sweetened preserves; soft drinks with added sugar; alcoholic beverages; energy drinks; and snacks with high levels of salt.
Progress to date
During the first three full years that the tax was in effect, it generated 20 billion HUF (about $68,000) of revenue. In the fourth year, revenue increased to 30 billion HUF (about $100,000) per year. Since the tax was first introduced, it has generated a total of 122 billion HUF ($417,000). Since 2012, the revenue has been assigned a separate budget line in Hungary’s health care budget and was used to increase wages in the health sector.
The tax has also facilitated the reformulation of products. Lawmakers have revised the tax several times to close loopholes that allowed manufacturers to make superficial changes to recipes in order avoid paying the tax. The law was also amended in 2015 to include alcoholic beverages.
To complement the taxation policy, Hungary has also introduced ‘incentives’ (i.e. – reduced tax) for poultry and milk, and fish products.
Why the program is important
Noncommunicable diseases (diseases that are not infectious) are the leading cause of death in Hungary as well as worldwide. Hungary has particularly high rates of heart disease, stroke and cancer, compared to other industrialized countries. Unhealthy diet is one of the main causes of communicable disease.
Studies have shown that consuming high amounts of sugar and salt can lead to serious health problem. High sugar consumption is linked to obesity, type II diabetes, and possibly cancer, while high salt consumption is linked to hypertension and heart disease. Per capita salt consumption is highest in Hungary compared to all other countries in Europe. Additionally, approximately two-thirds of Hungarians are overweight or obese.
The National Institute for Health Development conducted an assessment of the tax in 2012. They found that 40 percent of companies that had sold unhealthy food products changed their recipes to reduce or eliminate unhealthy ingredients. The prices of products that were not changed rose by 29 percent, and sales of those products fell by 27 percent.
In 2014, the National Institute for Food and Nutrition Science conducted another assessment. They surveyed consumers who consumed unhealthy food products and found that between 7 and 16 percent of them switched to a cheaper, often healthier, product when the tax went into effect. Between 5 and 16 percent of those surveyed consumed less of the unhealthy product after the tax went into effect.
Between 59 and 73 percent of the people who reduced their consumption of one or more unhealthy products consumed less in 2014 than in the years prior. This suggests that the tax still had an effect several years after it was passed.
Surveys have found that a full 30 percent of Hungarians have reduced their consumption of packaged sweets, 22 percent have reduced their consumption of energy drinks, and 19 percent have reduced their consumption of soft drinks.
In 2015, the National Institute for Food and Nutrition Science found that the tax had generated the equivalent of $219 million since it went into effect. In 2013, revenue from the tax accounted for about 1.2 percent of government health spending.
Point of contact
Ministry of Human Capacities: email@example.com
- France has a tax on all products containing refined sugar
- Other countries have installed taxes specifically on sugar-sweetened beverages, including Mexico, French Polynesia, Portugal and France. Ireland and the UK are set to begin taxing sugar-sweetened beverages in 2018.
- Some US cities tax sugar-sweetened beverages, including Berkeley, Philadelphia, San Francisco, Oakland, and Boulder.