Tax-Exempt Tribe Imposes First Junk Food Tax

By: Margaret Nollau

The Navajo Nation is a Native American tribe, which encompasses a geographical area approximately the size of the state of West Virginia. Its borders cross Arizona, New Mexico and Utah. Like all other Native American tribes, the Navajo Nation is exempt from taxation by the United States Government. It is therefore ironic that it was this tax-exempt group who became the first jurisdiction in the U.S. to successfully win the battle to impose a junk food tax.

The Navajo Nation President, Ben Shelly, vetoed the legislation to impose the junk food tax three times due to concerns of how the tax would be regulated. There were worries that this tax may negatively impact small business owners and consumers. The tax gained favor among tribe members, however, and as of March 2015, junk food such as chips, soda, desserts, fried foods, and other products containing “minimal-to-no-nutritional value” sold on Navajo reservations will be slapped with a 2% sales tax. It is estimated that this new ‘sin tax’ will generate $1 million a year, which will be used for promoting greenhouses, cooking classes, community gardens, food processing and storage facilities, and farmer’s markets among other health promotions.

This new tax on junk food is partially in response to the many health concerns Native Americans face. The Indian Health Service reports that of the Navajo Nation’s 300,000 members, nearly 25,000 of them suffer from type-2 diabetes. Another 75,000 are classified as pre-diabetic. Unsurprisingly, hypertension and cardiovascular are among the health concerns facing Native Americans.

The Navajo’s tax was not the first of its kind. Mexico had previously implemented taxes on products with high fat and sugar content. As previously stated, this junk food tax is the first of its kind in the United States and only time will tell how it fares.

Source:  Robert W. Wood, Native American Tribe—With Tax Exempt Casinos—Has Nation’s First Junk Food Tax, Forbes, (Mar. 27, 2015), http://www.forbes.com/sites/robertwood/2015/03/27/native-american-tribe-with-tax-exempt-casinos-has-nations-first-junk-food-tax/.

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