Taxing Sweet Drinks
Earlier this month, The New England Journal of Medicine featured an opinion piece about taxing nutritionally empty, sweetened beverage items. The article, entitled “Ounces of Prevention – The Public Case for Taxes on Sugared Beverages,” specifically highlighted the proposal considered but recently dropped in New York State. Governor Patterson of New York late last year proposed an 18% sales tax on soda and fruit beverages containing less than 70% juice. In Maine a wholesale tax on sodas and the sweetening syrups used for their production had been implemented by lawmakers but was recently overturned by voters. With these proposals and related studies in the spotlight, public officials and health experts have increasingly been pressing the beverage tax possibility.
Governor Patterson and many proponents across the country call their proposals “obesity tax” programs because recent research suggests that sweetened drinks contribute significantly to the country’s obesity epidemic. (Yes, little surprise…) As the NEJM writers suggest, sweet drinks “may be the single largest driver of the obesity epidemic.” Studies and research reviews have illustrated the link between sweet beverage intake and increased BMI, diabetes, and overall nutrient deficient diets.
Government and many public health officials cite not only the human toll of these trends but the financial burden to State health programs. They see ample justification for including sweet beverages in the current “sin tax” model along with cigarettes and alcohol.
On the other end of the issue is the relative unpopularity of these taxes. Although many who smoke or drink may not think favorably about taxes on cigarettes and alcohol, the public as a whole generally supports (or doesn’t actively oppose) these products’ continued taxation. In the case of cigarettes, fewer people smoke these days, and the health risks are well known. In the case of alcohol, support likely stems from both public health concerns and in some cases certain moral traditions or perspectives surrounding alcohol (hence the “sin” tax concept…).
But the case for sweet drinks (and snacks) is more complicated. For one, these “sweet” (or snack) categories can be much harder to define. A cigarette is a cigarette. (Although in most cases, tobacco products as a whole are subject to tax.) Alcoholic beverages are just that. (Except medications that contain alcohol for medicinal purposes…) As for sweet drinks, tax-related definitions have shifted much over the years. In certain states and proposals, only sweetened and carbonated beverages have been included. More recently, the definition has expanded to incorporate non-carbonated beverages that contain sweetener and are less than at least 50% juice. It can be a fine and seemingly arbitrary line.
The second stumbling block to taxing sweet beverages (or snacks) involves their universality. Relatively few people smoke these days – at least compared to earlier decades. However, sodas, fruit “flavored” beverages, and sport/energy drinks have earned no such stigma. They’re everywhere, and the “everyman”/-woman drinks them. At the voting booth (in ballot measures like Maine), these consumers don’t take kindly to anyone raising the price on what many of them consider grocery staples.
As the NEJM authors say, there are two cases to be made with a selective taxation program. On one hand, a tax can be implemented primarily for revenue purposes that can either supplement the general State budget or be directed toward health programs. (In the case of New York, the intended revenue would have gone to health services in the State.) Cigarette taxes, for instance, are justified by the substantial cost imposed on state governments in treating smoking disease (lung cancer, emphysema, etc.) and by the anti-smoking (preventative and cessation) programs these tax revenues can fund. Supporters of a sweet beverage tax ask why their programs can’t be seen in the same light – with tax revenues offsetting costs related to diabetes treatment and similar education programs. (Not to mention children’s dental programs. Fair warning: gross pictures.)
On the other hand, a selective tax is intended to decrease consumption of the targeted products. Studies suggest a mixed picture on changing consumption habits. The NEJM authors cite research from both Yale University and industry publications that show significant reductions in consumption (e.g. Yale – a 10% cost increase correlated with 7.8% less consumption). However, a PricewaterhouseCoopers report (PDF) from 2005 (prepared for the Grocery Manufacturers Association) suggests that typical selective “snack” taxes have little impact on consumption. The impact may rest primarily in the amount of increase. Small cost increases may not register with consumers. However, larger increases (such as the 18% rate that Governor Paterson of New York proposed) are likely to influence consumer purchases.
Critics attack these sweet tax proposals from several angles, some more compelling and relevant than others. We understand the frustration surrounding seemingly random legal definitions of the potentially taxed products. And we can see how this kind of tax program would create its own costly red tape for state governments and merchants, especially small businesses (who must devote a higher ratio of their time and profit to tax-related administrative duties) and those merchants whose business includes multistate sales. There are plenty of solid arguments working against the concept of selective taxes.
However, some criticisms (pardon us) we take issue with. Sure, we’re in a recession and it’s a bad time for businesses to take on additional burdens. Some argue that beverage companies could suffer a further downturn in sales. On the other hand, these companies have – for years or decades – made the bulk of their money marketing unhealthy products/lifestyles and contributing to the public health burden. Arguments about paternalism aside, there’s inevitably the issue of the large “public” medical bill handed to all of us, whether we’ve been responsible and taken care of ourselves or not. If more of the bill can be shouldered by those who manufacture, sell and purchase the offending pseudo food and beverage items, maybe that’s not such a bad idea.
Likewise, we have little patience for the critics who pull out the violins in the name of tax “regressiveness” – that the selective sweet tax will “hurt” poor people more. As the aforementioned PricewaterhouseCoopers report cites, households earning below $10,000 annually spend a considerably larger percentage of income on snack foods than a household bringing in $70,000+ (11.9% compared to 1% in 2004). It’s a sad picture, yes, but not for the reasons these critics see. Pardon us for interpreting some convenient enabling behind these critics’ sympathy….
With State budgets increasingly in the red, we’ve likely not seen the last of the beverage tax proposals. (With the popularity of recession diet “comforts,” we’ve also not seen the last of the public pushback.) We acknowledge that the tax topic is a sticky wicket, to be sure. But we thought we’d ask you for your opinion: should sweet beverages be added to an already existing “sin tax” system? What impact do you think it would or wouldn’t have on consumption/public health/product perception in the current economy? Other thoughts?
nookly Flickr Photo (CC)
Further Reading:
Fast Food Inulgence, Dirty Marketing Tricks and Personal Responsibility
Heart Attack Grill – Where Failure of Coronary Circulation is a Laughing Matter
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Posted By: Worker Bee
Hi Mark, I love your site. It is fantastic. I have never posted but I just couldn’t resist.
Today, because our esteemed politicos need to pay their bills, we debate larger taxes on sweetened drinks. But isn’t this a slippery slope? Tomorrow, it will probably be high fat foods like beef. Because eggs are very high in cholesterol, I’m sure at some point there would be some sort of debate about a large tax on them, too. Of course, being a paleo dieter, you would probably vehemently disagree with such nonsense (as would I). Of course, politicians would take your opinions and those of everyone else who “debate” this topic into consideration. Being prudent leaders, at some point in the future the government would probably get a bunch of medical professionals together and form a health food index with varying levels of taxation based on their professional judgment. Of course, being an independent division of the government, they would have absolutely no pressure from major food producers to do the wrong thing. They would only utilize the best scientific research!
Even though I don’t drink sugar water or sell it, who am I to decide what to take from one group and what to give to another? Doing so is always wrong. It is always theft. In every case. Please don’t promote it.
I have not heard of these proposed taxes until now. And I think they are a Fabulous idea! Instead of pimpin’ out 12-paks of cola @ 2.99…
I have never been much of a soda drinker & lately have shyed away from all packaged beverages. I’m sure the whole subject has all kinds of wavy lines of demarcation, but the whole non-nutritive food industry needs to be reined in! uh-oh, I feel my feet steppin up the soap box…
Why should there be a “public health issue” at all? How about separating government and health care, rather than arguing about one particular tax or another?
Get rid of any and all government involvement in health care. Stop taxing tobacco, alcohol, etc. Let people decide for themselves whether or not to smoke, drink alcohol, or consume unhealthy sweets, and let them live with the consequences of their choices.
Consider checking with Americans for Free Choice in Medicine (http://www.afcm.org) for more details.
I think it’s absolutely essential that they do start taxing and restricting people, especially children, from consuming these products. They are harmful to individuals and society.
What ever happened to personal responsibility? I don’t drink sodas or sugared beverages… heck, all i drink is water (from the tap) and 1/2 a cup of black coffee in the morning, but once they start taxing foods differently, I agree with Mike, who’s deciding what is “best” and where will it end?
The government should stay out of it entirely.
There is of course the legal issue of how to appropriately define the thing being taxed. It is a slippery slope because it opens the door to other “sweet” things being taxed. How is a soda nutritionally different in terms of health impact than a Twinkie or some white bread? Does that mean every time another study comes along that another thing will be taxed? If a study shows a connection between margarine and increased BMI or cancer, will there be a move to tax that?
People that want to smoke still smoke regardless of taxes.
People that drink still drink regardless of taxes.
People that want to ingest “sweet” drinks still do it regardless of taxes.
Taxes don’t prevent people from doing what they want to do.
Perhaps you could say that these things create medical problems and that the taxes levied on these things could be used to treat the problems caused by them. What value does the government add being a middleman between an obese soda chugger and health care? Couldn’t the soda chugger just pay for his own health care problems? All the government can do is take a cut out of the total $$ available to that person for health care through it’s inefficiency. Nobody wins.
The larger issue around all of this is that people need to learn to take personal responsibility for their own actions and stop relying on others, especially the government, to do it.
I’m with Mike M. The last thing we need is for the government to increase its influence on people’s eating habits. These are the same people who for years have been telling people to build their diets on a foundation of grain, who have been telling us that fat kills, and who have made it possible and profitable for corn to be the foundation of pretty much every item in the grocery store. I’d rather they didn’t start giving their recommendations real teeth through taxation, even though I would agree that it would be a better choice for folks to drink something that doesn’t damage their health.
People should choose on their own to live in a more healthy way anyway, and if they don’t they should have to live with the consequences.
As a New Yorker, I feel the heavy burden of the tax crazy politicians. While I don’t consume these beverages, I can’t help but be horrified! Where does the taxation end!?
HOWEVER- I work 2 jobs, I live in manhattan, and I struggle to make ends meet constantly. So as someone who doesn’t leech off other tax payers and is frustrated by all the taxes, I’m happier to have a user only tax. Smokes are $10 in this city, and when that went into effect I couldn’t help thinking “so smoking is bad for you, but so is mcdonalds and no one thinks about taxing that!”
I don’t like the government taxing- but if more money is needed, I like the idea of taxing people who overall cost the “system” more money, rather than someone who spends great resources to be healthy and give to the government!
Mike,
You argue your point well. Initially I was in favor of the tax as there’s not too much argument among the health community that sugar-loaded soda is bad. But the waters become murkier once taxes spread to the food industry. Agra has a billion dollar lobbying machine to keep the tax off corn, while high fat and (dare-we-say!) imported olive oil may not stand a chance.
Next they will put a tax on red meat because it’s “unhealthy”. Informing and education is much better than taxing and decreeing what should or shouldn’t go into my body.
Agree with Mike M. and he stated his point well. I’m against any kind of increased government intervention into the lives of private citizens. While I choose not to drink sugary drinks or soda, that doesn’t mean I am in favor of a tax to prevent/discourage others from doing so. What next? It is indeed a slippery slope and as someone who chooses to eat something other than a mainstream diet, I feel very uncomfortable with this idea.
As soon as you give this kind of power to the gov’t, you cannot take it back. I disagree with any kind of specialty tax on consumer goods for this very reason.
Quite possibly the dumbest idea I’ve heard in a long time. What about powders? What about legitimate uses like exercise, are we going to tax people who are fit or trying to do so? Do they think we can’t get our fix by buying from other countries?
Then again they are politicians who feel their job is to write legislation otherwise people might not think they’re doing anything. Have you seen how many fat politicians this country has?
The move toward taxing high fat foods is already starting… how sad. hopefully it will be limited to processed fast food. We can thank the radical vegetarians for this. Watch the documentary “Fathead” which was released just recently. I saw it last night. VERY revealing!
Just another attempt of the Government trying to part people with their hard earned money.
Big Government = Little Freedom!
I agree with Mike M. as well. I am personally responsible and I advocate that others be the same way. Just because someone has a bad habit or does something that other people disagree with doesn’t mean we should tax those people or prevent them from doing what they want to (so long as they don’t hurt others in the process). And more taxes just makes me shudder…
Wowsers! One of the things I love about this site is all the intellectual banter! Now I have had to re-think my quick-draw response earlier… Yes, it is all about freedom of choice & none of us chooses to consume those products & live healthier lifestyles, etc… hmmmm Well, I guess one route might be let them eat cake & let Darwin weed ‘em out???
Mark,
I’m a huge fan of your site, and I rarely miss my daily apple! That being said …
I’d be cautious when endorsing something like this.
It is refreshing to see big government recognizing where the real health risks lie, but just because they are right on this, doesn’t mean they’ll be wrong on fat or anything else mentioned by the other posters here.
This is a dangerous and slippery slope into increased governmental and bureaucratic interference into our lives. How many freedoms are we willing to sacrifice on the altar of “protect me from myself?”
Pretty soon sun exposure is going to be too dangerous (cancer), so they’re going to tax the beach. Lifting weights is going to be dangerous (joint injury), so they’re going to tax gym memberships. Going on hikes in the woods is going to be dangerous (bee stings?), so they’ll increase taxes on National/State parks. All this in the name of easing the burden on government health care. Where does it end?
I think taxing only the users and producers is the right choice for now, if a tax must be levied, but I really hope these taxes don’t starting infringing on my ability to live a healthy, primal lifestyle.
-Bryce
this is bazard.
aside from Mike M’s point, I think using “consideration of people’s health” as an excuese to get more money out of poeople’s pocket (let’s face it, no corporations would take this burden on its own shoulders) might be legitimate only if the money is specifictly going towards health benifits or public health education. (and I hold my opinoin on that as well).
If people aren’t educated, even when the price goes up, they would just switch from coco-cola to no brand cola, from no brand cola to sugar + water…
wheather a tax will improve public health in the long run, is highly questionable (I’d say out of the question).
Yet if the big corporations suffer a huge chunk of economic disadvantage from this action, the first and easiest cost they could cut is again, labor.
While the price level of healthy food still stays higher than junks, people who had just paid more to lose their jobs would end up only further away from the healthy choices.
in an economy as bad as today’s, cola tax bringing benifits to public health and health awareness is to me merely a joke.
Get the government out of our lives!!!
It’s not just paternalism, which is itself disgusting and against the principles of the US Constitution, but this is a blatant attempt by certain special interest groups to manipulate our lives. I am in total agreement with the points presented in Fat Head. Some persons are never happy unless everyone is just like them, with their values and their behaviors. Freedom? Not for those folks.
Use education to adjust behavior if you wish, just don’t disguise stripping us of our liberties using the veil of “the greater good”.
Just for the record, there was no official endorsement here. I simply thought it would make a good discussion. Thanks for all the great comments!
Mark, I love ur blog, besides the great information and health tips, u always bring up interesting stuff to think about!
Slippery slope people slippery slope. I would love a tax on coke, but what if one day they decide to tax something that I use? Then its a problem and if they start taxing one food/bev item the door is wide open. NOT A GOOD IDEA.
I like the idea of the usage tax. One of my favorite parts about my journey toward primal is the control that I am grasping over my own personal health and well-being. If I can (partially) choose my level of taxation by my choice of consumption, that gives me better control of my financial well-being. The assumption here is that a usage tax would replace an income tax or health care premium that I pay. Not sure it that’s a safe assumption.
Thanks Mark, for bringing up so a relevant topic.
This is an intricate web of conflicting political & social values. On one hand, if you get yourself really sick from eating, say, the processed garbage that passes for “food” (i.e. the SAD) and you do not have the ability to pay for your hopsital care, then the cost is passed on to the taxpayers. This situation will probably get worse with universal health care. So in that manner we all bear the cost of each other’s poor personal health choices. But the libertarian in me shudders at the thought of the gov’t taxing whatever they deem fit & dictating what I can & cannot eat. It’s a tough call.
A different thought on the topic – what about warning labels (like on cigarette packages)? Allow people to make more informed decisions for themselves, rather than relying on the nanny squad mentality. I doubt it will come to pass (except maybe in California, I could see them going for it), but it’s an interesting thought.
More importantly, when something “contains real fruit juice”, maybe it should specify how much fruit juice? If it’s 10% fruit juice and 90% sweeteners and artificial dyes, that’s not really a recipe for anything I’d want to drink.
Disclaimer – I don’t drink juice much anyway – less than a cup a week. Too much sugars for too little return, IMHO.
Brilliant post Mark.
I struggle a lot with this issue. What makes me lean towards implementing the tax is the big similarity I see between sugar and tobacco:
- It would appear to me that refined carbs do trigger physical dependency on some users, sinking them in a consumption spiral they can’t get out of.
- There is strong evidence linking refined sugar intake and health problems.
- All taxpayers, regardless of their eating habits, are paying the cost (and shouldn’t).
- The cost of opportunity a country pays for high obesity rates in it’s population is high (less productivity an bigger environmental footprint, for example)
- The companies profiting from this should feel pressure to migrate towards other healthier products in the mid-term.
On the other hand, the problems I see with implementing the tax are:
- As you said, where do we draw the line of max/min sugar content.
- Healthy or not, refined carbs do help very poor people to meet their daily caloric requirements.
- Laws in the US can still be based on absolute moral values instead of hard evidence (THC, stem cell research, gay marriage, intelligent design in schools?)
- We are experiencing a paradigm shift where, to the horror of many, the typical food pyramid is slowly being redesigned.
I think the last point I make is a very tricky one. Most of us Primal eaters get very mixed reactions when asked about our diet, usually negative and sometimes even aggressive.
Maybe we need more education and obesity-related deaths to actually question the real value of carbs as a nation before pushing the tax. Or is it better to be arbitrary and fight the paradigm with economical punishments? I’m not sure yet…
Sadly I think a tax on coke, sugary fruit juice, etc, would not stop people from buying them and would just cause them to cut out other items like fresh vegetables and meat. Granted the majority of people don’t seem to buy a lot of that stuff anyway (especially, it seems, the lower income people who would be most affected by this tax), but now I fear they would buy even less if this tax exists.
Changing laws or adding taxes, are easy, culturally unfulfilling substitutions for striving to improve collective changes in social behavior.
The irony of the whole thing, as pointed out on the Weight of the Evidence blog,
http://weightoftheevidence.wordpress.com/2008/12/26/new-yorkers-brace-for-double-tax-on-sugared-beverages/
is that corn is heavily subsidised by tax payer money. This is the reason why the most common sweetener in soft drinks, high-fructose corn syrup, is so cheap. It makes you think, doesn’t it?
Love your site and look forward to it daily but….
It’s about freedom my friend.
Taxes are the enemy of freedom no matter how big of a greater good wrapper you put on it.
The global warming cap and trade scam is a prime and dangerous example.
Freewill!!!!