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Tax on Soft Drinks Could Relieve States’ Budget Woes

| Wednesday October 7th, 2009 | 12 Comments

Rubens_Bacchussoda2A new report by a health advocacy group calculates a tax on soda and other sugary drinks could raise $10 billion a year, tapping into current fiscal anxiety in state and local governments.

The Center for Science in the Public Interest argues a tax of 7 cents per 12 ounces of soda (a typical can) would fill government coffers in the long-term as well, by lowering health care costs. Several studies have shown a correlation between drinking soda and obesity, a costly health epidemic.

In September, the influential New England Journal of Medicine published a report suggesting a national 1 cent per ounce tax, or 12 cents per can.

Thirty-three states already have small taxes on sugary drinks — these taxes amount to, on average, no more than 5 cents or so per 12 ounce can. Given the average cost of a can of soda is .75 to 1.00, the two proposals would levy a tax of around 10 to 16 percent per can.

Social Engineering? So What?

Opponents of any beverage tax, which not surprisingly include companies like PepsiCo. as well as trade groups like the American Beverage Association and the Center for Consumer Freedom, say taxing soda limits personal choice. From the Los Angeles Times:

“The tax code should not be used as a tool for social engineering. Nor should it be an instrument for penalizing individuals’ personal food choices — choices that some government officials find distasteful,” said J. Justin Wilson, senior research analyst at the Center for Consumer Freedom.

“Taxing soda pop is another paternalistic policy idea, which holds that politicians and government regulators, rather than individual citizens, should decide every aspect of what, where and when we eat.”

But is it really “social engineering” or just common sense? It is a fact that higher taxes on cigarettes, combined with increased awareness of the negative health consequences, has led to a dramatic drop in smoking (outside of Mad Men), with an associated reduction in smoking related illness and health care costs.

If that is social engineering, sign me up.

Government Balks

Despite President Obama’s casual endorsement of the idea, however, the influential Senate Finance Committee neglected to include a National Soda Tax in its health reform proposal last month.

Kelly Brownell, author of the New England Journal’s proposal, told USA Today it is more likely that soda taxes would be adopted first by states, then by the federal government.

“That’s what happened with tobacco. The states were on it long before there was federal action.”

More:

Op-Ed by Kelly Brownell and David Ludwig in the Los Angeles Times 10/06/09


▼▼▼      12 Comments     ▼▼▼

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  • Fred

    Why doesn’t the author come on out of the closet and admit that he’d like to see the US become an authoritarian type of regime? No doubt given his past articles in support of communist countries, in support of higher taxes and reduced personal freedoms, such a change in US policy would make his wildest wet dreams a reality.

    • Tully

      Fred – how does your comment help the conversation? I don’t think anyone wants the US to become a more authoritarian regime . The point of the article is to describe one possible solution to the fact that Americans chug way too much junk food and it costs us all. Why shouldn’t a government take a position on that? I’m not saying the tax is a good idea, but if companies can convince stupid people to chug soda (which is exactly what happens) then shouldn’t there be a recourse? Or would you like to take of a generation of fat diabetics all by yourself?

      • Fred

        Well, Tully, my comment helps to point out that the author has revealed himself, in a number of articles, as a supporter of authoritarian government mandates being forced upon the people. To be frank, I don’t believe that the government can offer a solution to the dietary problems of the people, as they’ve had a large hand in getting the people in the current fix their in.

        How, you may ask? Take a look at one of the primary components of soda, high fructose corn syrup. This ingredient is in large part responsible for the fattening and increasing diabetic problem this nation is facing. Indeed, a large number of refined corn products find their way into many junk foods. Given the amount of government subsidies that are issued to large mega-farms for producing high volumes of corn, doesn’t the government also have a hand in the problem?

        Here’s an idea, why not write about how these government issued subsidies are contributing to the expanding American waistline, and how removing such subsidies could achieve a positive affect. Perhaps such subsidies could be switched to encourage the production of healthy vegetables or fruits.

        • Nick Aster

          Fred – I think you’ve hit on the real problem. However, bear in mind that none of those government subsidies would exist without the massive influence of the agribusiness lobby. Really, your example is a matter of government failure, not government imposition. My thoughts on the tax idea in general below…

  • millionbells

    So, okay, there’s already a boycott on bottled water and milk (human growth hormones or just plain from animals). And then there’s a tax on soda, probably also on juices. What is there left to drink on the go?

    And don’t say tap water, if it isn’t tainted with lead from 50 year old water mains, it’s the fact that fluoride and chlorine treatments are also bad for you. And of course, the desposable water filters go straight to the landfill.

  • Jen Boynton

    I think this is an interesting idea. Pigovian taxes (http://en.wikipedia.org/wiki/Pigovian_tax) are a long-standing and successful way to pass the costs of bad choices onto a populace. Cigarettes, alcohol, and gambling are all examples. It’s not communist to increase the cost of bad choices– its common sense. Drink as much soda as you want, but pay the price for the harm you’re doing to yourself!

  • Nick Aster

    I actually agree that a tax on things like junk food (and possibly other ‘sin taxes;) is not the ideal solution. For one thing it makes government dependent on bad behavior for revenue. For another, it creates resentment of a “nanny state” and I’m not sure it really encourages free thinking or learning.

    Regulating the ability to advertise certain things, regulating the use of high fructose corn syrup and other dodgy ingredients, and most importantly, getting lobbyists out of Washington and out of funding political campaigns might be more real solutions. Granted, I don’t have a genius idea for how to accomplish the latter, but I’d like to see the conversation start here rather than necessarily with a tax.

    Jen – it’s also not about paying the price for harming yourself, it’s the fact that there’s a huge cost to society in general – in lost productivity, in health care, and in general malaise of society.

    • Jen Boynton

      yeah of course

    • Fred

      Indeed, Nick, I agree concerning your points on lobbying in the interest of agribusiness. Hence the reason why we see the 10% blend of ethanol in our gasoline these days, never mind the fact that it is a step in the wrong direction with regards to solving our energy woes. Yet that is another gripe.

      I do share your sentiments in that if lobbying should be banned.

  • Julie Feldman MPH RD

    The debate surrounding the soda tax has been interesting to follow. As a Registered Dietitian and consultant to the food and beverage industry, I keep tabs on both arguments and am concerned about both public health policy and individual choice. At the end of the day, obesity is a complex issue that requires a multi-faceted approach to address. There is no silver bullet or easy solution, like a simple tax, that will address our nations skyrocketing obesity rates. Just today the NY Times published an article make a great case as to why a simple tax of 1 cent per oz. (which is what some policy makers are proposing) will not be effective in curbing obesity. The article is found here. A solution will require comprehensive efforts to educate American consumers about the importance of balancing calories, consuming foods and beverages in moderation and participating in physical activity.
    Julie Feldman MPH RD

  • claudialasota

    To help the budget especially in a state like NY. why don't those folks in Albany take a 25% salary CUT? People are taxed to death here and for WHAT? People have been drinking those sugary things for years. We grew up on KOOL-AID.and 25 cent juices. The difference is that we all went out to play. Kids don't do that any more they're not allowed out of the house until mom comes home. Unfortunately she has to work two jobs to afford to live here. She certainly can't afford to move to a better place. This is the same person who will have to pay that rediculous tax. Governments should stop trying to control the everyday lives of the people and the choices they make. Adding another tax onto another thing jist puts more money in some politicans pocket at the expense of those who can least afford it. But then again since when does anyone in politics care about anything or anyboby but themselves and their cronies?

  • claudialasota

    To help the budget especially in a state like NY. why don't those folks in Albany take a 25% salary CUT? People are taxed to death here and for WHAT? People have been drinking those sugary things for years. We grew up on KOOL-AID.and 25 cent juices. The difference is that we all went out to play. Kids don't do that any more they're not allowed out of the house until mom comes home. Unfortunately she has to work two jobs to afford to live here. She certainly can't afford to move to a better place. This is the same person who will have to pay that rediculous tax. Governments should stop trying to control the everyday lives of the people and the choices they make. Adding another tax onto another thing jist puts more money in some politicans pocket at the expense of those who can least afford it. But then again since when does anyone in politics care about anything or anyboby but themselves and their cronies?

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