« Back to Home Page

Sign up for the 3p daily dispatch:

Soda Tax Ideas Grow Among Local Governments

Tori Okner | Monday March 8th, 2010 | 10 Comments

The notion of a soda tax has taken on new importance over the last few weeks as local governments increasingly consider the proposition–the term is loosely used to encompass any tax on sweetened beverages, both to be paid by the consumer and the producer. This week, Philadelphia Mayor Michael Nutter put forth his 2011 budget proposal, including a 2 cent-per-ounce tax on sugary drinks. Last week, Colorado Governor Ritter signed a series of tax bills in an effort to keep the budget balanced and, in the process, implemented a similar tax. Two weeks ago, California Democratic Senate Majority Leader Dean Florez introduced a bill to tax sugary drinks. In New York, 2010 marks the second year that Governor Paterson has proposed taxing sugary beverages, and similar proposals are gaining traction across the country.

The possibility of a soda tax grabbed headlines at Triple Pundit and with mainstream media last September when President Obama deemed it worth consideration in an interview with Men’s Health. At the time, no such tax had been proposed in Congress. Earlier in the year, the Senate Finance Committee included it in a paper on funding options for health care reform. Yet, despite several reputable reports in support of the tax, published by the Institute of Medicine of the National Academies, researches at UCLA, the New England Journal of Medicine, and the Center for Science in the Public Interest, the Committee did not suggest a National Soda Tax in its 2009 Health Reform Proposal. Reaction to the omission by the Committee lead to prescient stipulation that state government would adopt soda tax before the federal government.

Pigovian taxes, those levied on market activities in which negative social costs are not reflected in the market price, aim to correct the discrepancy in price and real expense. The soda tax mechanism is intended to account for the public health effects associated with the overindulgence of sweetened beverages (obesity, diabetes etc) and discourage excess consumption. Thomas R. Frieden, head of the Centers for Disease Control and Prevention (CDC), has just published a co-authored paper on childhood obesity in which he notes that, “each additional daily serving of sugared soda increases a child’s risk of obesity by 60 percent,” and suggests that a tax would reduce consumption.

Often compared to the taxing of tobacco, it is deemed another “sin tax” by some opponents. Veronique de Rugy, a tax scholar and senior research fellow at the Mercatus Center at George Mason University, devalues the soda tax for two reasons. First, she asserts that, “sin taxers don’t appreciate human creativity: Consumers have a knack for replacing one sin with another. When the price of a “sinful” good increases, people often substitute an equally “bad” good in its place.” Secondly, says de Rugy, a soda tax is a problematic revenue source for governments. After all, if the tax succeeds in dissuading consumption, the funding stream constricts.

At the federal level, support for a soda tax seems to have been successfully suppressed. Strategic and extensive lobbying, led by the beverage industry, disputes the relationship between taxation and consumer behavior, the wisdom behind raising “food” prices during a recession, and the notion that government should influence individual choice. An interview with the LA Times quotes House Representative Linda T. Sanchez lamenting that, “’We went from having real interest in this idea to it just falling off the table,” Sanchez said. “It was my perception that opposition increased as members began hearing from local businesses that were part of the beverage industry coalition.” The same coalition has begun to target state legislators.

As local governments actualize various manifestations of the soda tax, the decision proves polemical. Among Triple Pundit readers, the soda tax has elicited arguments about personal freedom versus authoritarianism, the role of public health policy and the nanny-state phenomenon, farm subsidies, and government regulation. Healthcare analysts question the motives behind various anti-tax lobbyists, including Latino groups. Pro-tax, provocative advertising by the Alliance for a Healthier New York has initiated an ad war over the issue. The battle may be headed your way.

Is there an existing soda tax in your area? If so, has it affected your decision-making? Are you opposed to taxing sugary drinks as a “sin tax” or do you see it as a means to offset associated health costs?

Photo credit to the NYC Dept. of Health via the Daily News- “Preview of NYC’s Department of Health and Mental Hygiene’s new ads: Don’t drink yourself fat.”


▼▼▼      10 Comments     ▼▼▼

Newsletter Signup
  • Nathan

    Wouldn't it be more logical to remove the subsidy for corn and high fructose corn syrup (HFCS)? After all, many believe this to be the real culprit in the case of childhood obesity.

  • Pingback: L'espresso | Manhattan Transfer » Blog Archive » Le tasse sono dolci di Andrea Visconti

  • Annie

    Veronique de Rugy is no longer at Cato. She is a senior research fellow at the Mercatus Center at George Mason University. She has an excellent piece on soda taxes here: http://reason.com/archives/2009/12/14/have-a-co

  • Pingback: The Twinkie Tax « Muddled Fairytales: Ruminations on Time, Space and the Digital Underbelly

  • http://profiles.yahoo.com/u/WXITWYCTBYJM2ZNKGC4SLLEEGU Tori

    Nathan- I agree that current subsidies are problematic and I'm curious to see what policy changes follow under Sec. of Ag Vilsack's leadership. Thanks for your thoughts.

    Annie- Thank you for your update regarding Ms. de Rugy's fellowship. The article you referenced is very interesting; there's an embedded link to it in the original post. Thanks again for your feedback.

    Best,
    Tori

  • http://www.blog.snowbeverages.com/ Stu

    Is “Sugar” Now the Source of All Health Problems in America?

    http://www.blog.snowbeverages.com

    I qualify the following by saying that this statement is merely my opinion and not intended to be presented as scientific fact:

    I woke up today unable to contain my frustration about the misleading information I am seeing in regard to the proposed soda tax and also the disproportionate focus some are trying to put on to the consumption of sugar alone.

    Sugar has calories. Yes, we know that. But let’s be clear: lots of healthy foods (like say, fruit) contain sugar and also, if you consumed NO calories, well, you wouldn’t do very well…. Of course there is a major obesity problem in this country. There is also a general health crisis in this country. However, trying to somehow place the blame entirely on sugar or on beverages like soda that are sweetened with sugar, is myopic at best, and misleading at worst.

    For instance, a lot was made recently in the press about a study released that concluded that there is a link between regular consumption of traditional soft drinks and pancreatic cancer. My dad just recovered from pancreatic cancer which nearly killed him a year ago. I am particularly sensitive to severity and risks of this illness. If you look at the anecdotal information passed around in the popular press on this study you will find that they claim that people who consumed soda regularly over prolonged periods of time were, according to that study, 87% more likely to contract pancreatic cancer. However, in that same study, they point out that people who consumed juice had no greater incidence of pancreatic cancer. Juice typically has an even higher sugar content and calorie count than even traditional soda. (Granted, the sugar is naturally occurring and was not “added”—but nevertheless, it is THERE.) So, people who drank soda got pancreatic cancer, but people who drank juice (with MORE sugar and calories) did not. Conclusion (according to that study): it was the SUGAR in soda that got people sick. I have not seen anyone in the press call them on this. I still can’t figure out why. In addition, did anyone ever stop to think that people who drink traditional soda everyday may also be more likely to have other unhealthy habits that are contributing factors (such as smoking or lack of exercise)?? Here’s my favorite part: what about the OTHER ingredients in traditional soda?? They often contain artificial sweeteners, preservatives like potassium sorbate or sodium benzoate, and many other artificial ingredients. Is there any chance that any of those chemicals might contribute to a greater incidence in cancer? Not according to that “study”—it’s the sugar. Just the sugar, everyone. Calories kill. I guess we all need to stop eating.

    Traditional soda contains unhealthy ingredients. We simply don’t use them. Diet soda contains many ingredients that I would never let me family consume. I have two five year old twin sons. I have absolutely no problem with them drinking a little Snow Natural Soda + Vitamins. I would never let them drink traditional diet soda. Rather than have our children misled and pushed into drinking diet soda (with it’s chemical artificial sweeteners and it’s preservatives that some claim are low-level carcinogens) why not teach them to look at health from an overarching and global perspective? Let’s be responsible and teach them to be as well. They should eat balanced and healthy diets. They should try and avoid chemical ingredients. They need to exercise regularly. If they do this, they will not become obese. Taxing soda won’t save them. It will temporarily put some money in the depleted state coffers and then it may have a myriad of other negative long-term economic effects (such as layoffs at local soda manufacturers, a strain on already-strapped low income families, etc.) but this “band-aid” attempt to raise revenue that is posing as some sort of “quick-fix” for the health and obesity problems in our state and our world, is really nothing more than an ill-founded and misrepresented lie.

    The fact is, people should eat and drink healthy and natural products. Taxing any beverage that has sugar in it (even natural cane sugar) will not solve any widespread health problem or any obesity problem. It may cause more economic damage than it provides in tax revenues. Furthermore, it detracts from a comprehensive and responsible dialogue on these important and timely issues or their actual solutions. Don’t be fooled.

    –Stu Strumwasser
    CEO of Refreshiliciousness
    Snow Beverages, Inc.
    http://www.blog.snowbeverages.com

    • Jamie

      simple answer: yes it is.

  • taxesreally

    http://www.youtube.com/watch?v=tGvO7nW4EqA

    This video makes me think of unintended consequences. These politicians speak about taxing pennies. This regressive tax adds dollars to our grocery bill. I wonder about if these same hacks have considered how much of this tax will be spent on replacing government letterhead after they’re thrown out of office.

    • Nathan

      That new anti-tax ad in New York does a good job leaving out what is actually taxed. At least they didn't actually throw a diet beverage into that cart. HFCS is processed like the liver processes alcohol, it might as well be taxed too so the state can help pay for all the health care issues HFCS causes.

      • taxesreally

        Soda as with all food in New York is already taxed by the state at 4% and by the county between 3-5%. It already contributes to the coffers of the state. Then add in the fact that the state keep 80% of the unredeemed bottle deposits. Now these politicians want to add another tax that will amount to 15%-25% levy depending on the liquid to price ratio. On a 20-oz dollar soda, one would pay an extra 33 cents in money that would go to government.

        They are singling out soda for punishment when it is NOT the only product that uses HFCS. I personally am a big fan of the new Pepsi made from cane sugar. It would be taxed the same because it is a sugar-sweetened beverage. So this is more then just soda, sorry Starbuck frappuccino fans, but less then everything. So eat those Hostess cupcakes to your less taxed delight.

        Commercial soft drinks has been around since the 1600's, but the obesity problems of the country the last 3 decades. The culprit is lifestyle, so could one get a tax rebate for going to the gym and maybe employing a personal trainer. When Paterson originally proposed the soda tax, he also recommended an addition tax on gym memberships and personal trainers. The politicians are failing to address the issue and are using the health crisis as smokescreen for their Ponzi schemes.

        One could go on about the failings of our government to address the issue, like having kids sit in gym class to write papers on the history of volleyball because all education must have a number grade attached under No Child Let Behind. If a person cannot see their toes, they only need to look in the mirror.

        We cannot allow the government to legislate personal morality and choice. The 18th Amendment teaches us the lesson of unintended consequence when the government tells the People what is “Sin”.

  • taxesreally

    Soda as with all food in New York is already taxed by the state at 4% and by the county between 3-5%. It already contributes to the coffers of the state. Then add in the fact that the state keep 80% of the unredeemed bottle deposits. Now these politicians want to add another tax that will amount to 15%-25% levy depending on the liquid to price ratio. On a 20-oz dollar soda, one would pay an extra 33 cents in money that would go to government.

    They are singling out soda for punishment when it is NOT the only product that uses HFCS. I personally am a big fan of the new Pepsi made from cane sugar. It would be taxed the same because it is a sugar-sweetened beverage. So this is more then just soda, sorry Starbuck frappuccino fans, but less then everything. So eat those Hostess cupcakes to your less taxed delight.

    Commercial soft drinks has been around since the 1600's, but the obesity problems of the country the last 3 decades. The culprit is lifestyle, so could one get a tax rebate for going to the gym and maybe employing a personal trainer. When Paterson originally proposed the soda tax, he also recommended an addition tax on gym memberships and personal trainers. The politicians are failing to address the issue and are using the health crisis as smokescreen for their Ponzi schemes.

    One could go on about the failings of our government to address the issue, like having kids sit in gym class to write papers on the history of volleyball because all education must have a number grade attached under No Child Let Behind. If a person cannot see their toes, they only need to look in the mirror.

    We cannot allow the government to legislate personal morality and choice. The 18th Amendment teaches us the lesson of unintended consequence when the government tells the People what is “Sin”.

  • BlakeKirkpatrick

    The manner in which a child custody evaluation is used by a court can also vary from state to state. In some states, the judges put a higher priority on the wishes of the children and that issue is addressed in the child custody issues evaluation. In some of those states, the child's wishes are considered if the child has attained a certain age. InIllinois, the child's wishes is a key factor. In other states, it is only one factor or not a factor at all. In Alabama, a chid's desire is not considered as a reliable factor in determininig custody, so the factors to be given priority over the child's wishes in the child custody evaluation are more focused on the well being an safety of the child.

  • Pingback: The Story of Stuff Team Takes on Bottled Water | Triple Pundit: People, Planet, Profit

  • Pingback: Post 5: Soda Tax | everydaynutritionbalance