The sales tax on cookies, chips, sodas and other junk food sold on the country’s largest American Indian reservation is going up.

Navajo nation president Ben Shelly signed legislation Friday to increase by 2% the sales tax on food with little to no nutritional value, starting next year. No other sales tax on the Navajo nation specifically targets the spending habits of consumers. It will remain in effect until 2020, but it can be extended by the Navajo nation council.

Navajos advocating for a junk-food tax said they wanted to pass a bill that could serve as a model for Indian country to improve the rates of diabetes and obesity among tribal members. Proposals targeting sugary drinks with proposed bans, size limits, tax hikes and warning labels haven’t gained widespread traction across the country.

“We want them to think twice about buying healthy foods instead of soda pop, potato chips and the junk food,” said Gloria Begay of the Dine Community Advocacy Alliance. “The effort is really much more in the message of Navajo people making better choices for quality foods.”

The bill cited statistics from the Navajo-area Indian Health Service that said about one-third of Navajos are diabetic or prediabetic, and the obesity rate for some age groups is as high as 60%. Diabetes was the fourth-leading cause of death in the Navajo area from 2003 to 2005, the health service said.

The $1m a year that the additional tax is expected to generate will pay for projects including farmers’ markets, vegetable gardens and wellness and exercise equipment in the tribe’s 110 communities. Begay said her group is meeting with tribal officials to figure out exactly how the money will be disbursed.

Another bill to eliminate the tribe’s 5% sales tax on fresh fruit and vegetables sold on the Navajo nation went into effect 1 October.

Shelly vetoed another version of the junk-food tax earlier this year. His spokesman, Deswood Tome, said Friday that the latest version is clearer on how it will be implemented.

Representatives of the beverage industry had lobbied the tribe to reject the tax, saying it would create problems for retailers and doesn’t solve health problems. It also applies to sports drinks, fruit juice and pita chips.

The tax won’t add significantly to the price of junk food, but buying food on the reservation presents obstacles that don’t exist in most of urban America. The reservation is a vast 27,000 sq miles with few grocery stores and a population with an unemployment rate of around 50%. Thousands of people live without electricity and have no way of storing perishable food items for too long.