State Taxes on Soda Pop Gain Momentum; Does the End Justify the Means?

Excise taxes on unhealthy foods or substances like tobacco have an irresistible appeal to state and national politicians. They help to correct budget deficits, particularly in hard economic times. They can also be said to improve consumers' health status. For many, however, they represent an unwarranted intrusion of public policy into our lives. Others reply, in response, that the benefits of such taxes outweigh the harm. I have written previously about this same topic (see: Federal Tax on Soda Pop Proposed: Can This Be Justified?). Below is an excerpt from a recent article that summarized recent activity in this area (see: Health officials ready to make push for statewide soda tax):

Health officials are ready to make the final push for a statewide tax on sugary drinks [in the state of New York]. Both the city and state health commissioners will meet with Gov. Paterson and a team of doctors...to discuss the so-called soda tax. Their goal is to tack on a penny-per-ounce tax to drinks with added sugar that contain more than 10 calories per 8 ounces....Experts say soda and other sugar-loaded drinks are the largest source of extra calories consumed by Americans. It's thought that a 10% price hike on soda would cut consumption by 8%...."It's a triple play. We would reduce obesity, earn revenue to support health care and, in the long run, cut health care costs," [a public health official] said. Studies show health care costs are 37% higher for the obese, [he] said. A recent...survey found voters back a tax on soft drinks 76% to 22% - and even tax-averse Republicans favored the plan, 60% to 36%. Philadelphia Mayor Michael Nutter proposed a 2-cent-per-ounce tax last week that he estimates would bring in $77 million to his city annually. The Colorado legislature approved a 2.9% candy and soda tax last month. It takes effect May 1. Washington Gov. Chris Gregoire has asked lawmakers there to come up with a tax on soda, candy and bottled water.

One of the most powerful agricultural lobbies in the U.S. promotes the expanded use of corn. You are probably familiar with the idea of ethanol production from corn, widely adopted in both the U.S. and Brazil (see: Corn lobby's tall tale of a gas substitute). From an environmental perspective, it makes no sense to divert fertile land toward fuel production when many in the world are starving. High-fructose syrup is now one of the major sweetening agents in soda. It seems to me that one of the only ways to provide our politicians an excuse to oppose the corn-lobby political juggernaut, particularly in our corn-growing states, is to give them a powerful reason to oppose it. The health of their constituents and the opportunity to generate new revenue may serve such a purpose.

The bottom line for me in all of this is that I support the idea of levying "sin taxes" on sugary beverages for health reasons and on bottled water for environmental reasons. One remaining challenge here is that the term "sin tax" no longer seems relevant or appropriate in these situations. One substitute term that I have come up with is "social benefit tax" but this smacks too much of the intervention by big-brother and sounds bureaucratic. It also glosses over the idea that many such taxes are levied mainly to generate more revenue. How about the term "triple play" taxes if they improve health in the short and long-run and also improve the budget?

Comments

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[Lance]

Riddle me this then Terry, with all due respect: are not these proposals (in regards to 'soda' directed solely towards the traditional, full-sugared varients? Avoiding the straw man of 'we don't know about health effects of artificial sweetners'), I really don't see much a down side to these proposals. True, they likely won't often apply to 'me', as I came to the realization about needing to switch to 'diet drinks' some years ago....but the benefits would be real. The only argument that I can really see against is two-fold: it's unconstitutional (debatable) and (the scary part) opens doors for the now ludicrous sounding theories you mention on when would the proverbial line be drawn? I could go into a much deeper discussion on this, about economic/trade balance theories to support our decreased use of corn in such manners (from having to import corn syrup, having to pay our farmers to produce corn product of this ilk and not more edible and universally more healthy, etc.)...but, really, where's the harm?

[Terry]

Tax, Tax, Tax... why stop at just pop and bottled water. We aren't we taxing the fat dripping from a hamburger or the air we breath. The idea that we can tax for social benefit means, that those who are high minded can tax behaviors they deem disgusting. The folks hurt most by the tax will be the poor but hey, we’ll feel better about it.