Internalizing the public cost of obesity in Spain: Distributional effects on nutrient intake

Studies dealing with obesity have confronted it either from the fiscal policy or from economic cost perspective. There is the need to target fiscal policy goals at the economic cost that obesity imposes on society instead of simulating arbitrary taxes schemes. This paper analyzes the effectiveness of imposing a revenue-neutral fat tax in Spain addressed to internalize the public health expenditure associated to obesity. Results suggest that this tax policy led to an improvement in the diet quality, and decreased the consumption of saturated fatty acid, sodium, and cholesterol. From the welfare perspective, the tax is regressive across all household segments.