As of April 1, Hot Cheetos, one of the top-selling snack foods on the Navajo Nation, are subject to a 2-percent “junk food tax” on top of the existing 5-percent sales tax.
The first of its kind in the country, the tax applies to all pastries, chips, sodas, desserts, fried foods and sweetened beverages sold anywhere on the Navajo Nation. In other words, shoppers should expect to pay extra for anything deemed to have “little to no nutritional value.”
“That’s at all retail outlets on the reservation,” said Martin Ashley, executive director of the Navajo Tax Commission. “That’s grocery stores, convenience stores and even restaurants that sell soda or desserts.”
Authorized by the Diné Healthy Nation Act of 2014, the tax comes on the heels of another bill that eliminated sales tax entirely on fresh fruits and vegetables and bottled water. Drafted by the Diné Community Advocacy Alliance (DCAA), the act was modeled on existing taxes on tobacco and alcohol. Known as Pigovian or “fat taxes,” these taxes are used to discourage consumption of unhealthy items and offset negative social costs.
“We’re serious about this,” said Gloria Ann Begay, a founding member of the DCAA, a grassroots group of volunteers. “We’re trying to encourage Navajos to understand the health issues and make better choices in regards to their purchases.”
Heavy consumption of junk food on the reservation has led to a health crisis, Begay said. According to Indian Health Service reports, an estimated 25,000 of the tribe’s 300,000 members have Type-2 diabetes, and an additional 75,000 are pre-diabetic.
“That’s one-third of our entire population,” Begay said. “The trend of obesity and diabetes is soaring very quickly, so we need to put some kind of stopgap measure on that.”
The tax is a victory for DCAA members who worked for more than three years to study the effects of junk food, draft a bill and educate lawmakers and the public. Navajo President Ben Shelly signed the act in November, one month ahead of Berkeley, California, the first U.S. city to approve a soda tax.
The Navajo Nation is not the first to consider this kind of tax; 34 states and the District of Columbia already tax sugar-sweetened soda sold in stores, states a report from the Robert Wood Johnson Foundation. Thirty-nine states tax soda sold in vending machines. But the Navajo Nation has gone further than any other government, making it the first in the country to tax both sugary beverages and foods that are deemed unhealthy.
The U.S. Agriculture Department has called the Navajo Nation a “food desert” because of its lack of access to fresh fruits and vegetables. Only 10 full grocery stores operate on the reservation, an arid, 27,000-square-mile territory straddling three southwestern states.
A DCAA survey found that as much as 80 percent of food stocked by grocery stores on the reservation qualifies as junk food. The group estimates that more than half of Navajo residents travel off the reservation to purchase groceries, with some traveling more than 240 miles round-trip just to buy fresh fruits, vegetables and meat.
“In Indian country in general, you have a pretty far distance between recognized grocery stores,” said Michael Roberts, president of First Nations Development Institute, a Colorado-based organization that advocates for food sovereignty and helped match DCAA with appropriate grants.
“Most residents are driving upwards of two hours or more to get to a grocery store,” Roberts said. With an estimated 100 convenience stores on the Navajo Nation, it’s little wonder that people are doing their shopping there.
At an extra two cents on the dollar, the junk food tax isn’t going to cause too much pain at the register, but Roberts believes the underlying message is powerful.
“Indians have the creativity and wherewithal to fix their own problems,” he said. “Indian country has a lot of places where it can lead the nation in creating new ideas, new policies, even a new tax that couldn’t be done anywhere else.”
Although individuals may not feel the tax, it is expected to generate $1 million per year—earmarked for wellness projects, including greenhouses, food processing and storage facilities, food preparation classes, farmers markets and community gardens.
The tax expires in 2020, but it can be extended should the Nation determine it is having the desired effect.
But the tax may fall short of expectations, said Kelly Brownell, dean of the Sanford School of Public Policy at Duke University and an internationally renowned expert on obesity. Brownell, who has advocated for junk food taxes since the 1980s, said a 2-percent tax is much too low to affect consumption.
The threshold where people notice a tax and it changes their purchasing behavior is closer to 20 percent, he said. That’s about one penny per ounce of a sugary beverage.
With a tax in effect, however, the Navajo Nation is benefiting monetarily, Brownell said. And in five years, it can increase the tax to further discourage unhealthy purchases.
Even the smallest junk food tax is a victory against obesity and disease, he said.
“The more places these taxes are passed, the more other elected leaders will be encouraged to make the same move,” he said. “Whatever happens with the Navajo Nation joins the activities elsewhere to form this overall picture of the nation moving in this direction.”