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April 23, 2009

Taxing Sweet Drinks

By Worker Bee
60 Comments

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

The Dope on Energy Drinks

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60 Comments on "Taxing Sweet Drinks"

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Mike M
Mike M
7 years 5 months ago
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… Read more »
Peggy
Peggy
7 years 5 months ago

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…

martin
martin
7 years 5 months ago

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.

tammy
tammy
7 years 5 months ago

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.

Jane
Jane
7 years 5 months ago

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?

RobS
7 years 5 months ago
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… Read more »
Kevin
Kevin
7 years 5 months ago
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… Read more »
MargotSPera
MargotSPera
7 years 5 months ago
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… Read more »
Elle
Elle
7 years 5 months ago

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.

RHasleton
7 years 5 months ago

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.

Kate
7 years 5 months ago
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… Read more »
David
David
7 years 5 months ago

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?

Dave, RN
Dave, RN
7 years 5 months ago

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!

Joe
Joe
7 years 5 months ago

Just another attempt of the Government trying to part people with their hard earned money.

Big Government = Little Freedom!

Autumn
Autumn
7 years 5 months ago

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…

Peggy
Peggy
7 years 5 months ago

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???

Bryce
7 years 5 months ago
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… Read more »
riceball
riceball
7 years 5 months ago
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… Read more »
Dave in Ohio
Dave in Ohio
7 years 5 months ago

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”.

Mark Sisson
7 years 5 months ago

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!

riceball
riceball
7 years 5 months ago

Mark, I love ur blog, besides the great information and health tips, u always bring up interesting stuff to think about!

Jay
Jay
7 years 5 months ago

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.

John V
John V
7 years 5 months ago

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.

Marci
Marci
7 years 5 months ago
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… Read more »
gcb
gcb
7 years 5 months ago
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… Read more »
SerialSinner
7 years 5 months ago
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… Read more »
Wayne W
Wayne W
7 years 5 months ago

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.

emergefit
7 years 5 months ago

Changing laws or adding taxes, are easy, culturally unfulfilling substitutions for striving to improve collective changes in social behavior.

Michael N
7 years 5 months ago

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?

AJP
AJP
7 years 5 months ago

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!!!!

Beth
7 years 5 months ago
Wait a minute. Doesn’t the government subsidize the production of corn? Much of which is used to make high-fructose corn syrup? Which is, in turn, used to sweeten the beverages government now proposes taxing? I’m not so sure these “slippery slope” arguments hold up in this instance. Where was the “slippery slope” when taxes were put in place on alcohol and tobacco? To my mind, nobody (and no body) *needs* what’s contained in pop, diet or regular. Identify products that are devoid of useful nutrients (can we all agree that a 20 oz. cola is doing no one any good?)… Read more »
SerialSinner
7 years 5 months ago

I think a good example of free will is not being forced to pay for what one does not use.

Sure, a complete Libertarian utopia sounds great, but is completely unrealistic. Free market doesn’t solve everything perfectly.

Taxing sugar-intensive products and using the obtained revenues to fund obesity-related public health treatments, I’d say, is not a threat to liberty. On the contrary, it forces people who choose to eat crap, to fund their own health care.

Nic
Nic
7 years 5 months ago

Look, we already have a tax on fruits and vegetables through the Farm Bill – just flip that around so that corn and high fructose corn syrup are no longer subsidized, and fruits and vegetables are subsidized. Prices to the consumer will change with no extra taxes at the point of sale.

Stephanie
7 years 5 months ago

The idea that ‘the right to consume unhealthful products without regulation is a personal liberty’ is a myth created by the tobacco industry. There’s no liberty or freedom in being addicted to products that a small number of individuals are getting rich off of, at the expense of everyone else’s health. Stop drinking the koolaid, folks! (pun intended).

Ed
Ed
7 years 5 months ago

Mike M nailed it right off the bat. These sin taxes are a horrible idea.

Sonagi
Sonagi
7 years 5 months ago
Aren’t fruit juices mostly sugar? The body processes natural sugars and added sugars the same way, so I don’t see much difference between fruit juices and sugary flavored water. While some fruit juices do contain anti-oxidants and vitamins (often added), they are, overall, not a healthful choice with the exception of 100% cranberry juice with just 9 grams of sugar in an 8-ounce serving. I am bugged seeing so many young kids sipping juice instead of water. A seven-year-old girl in our after-school program flashed a mouthful of silver while chatting with me. I didn’t get my first cavity until… Read more »
Greg at Live Fit
7 years 5 months ago
I have seriously mixed feelings about this. My primary beef with the idea of taxing sweet drinks is that taxation is essentially the government’s way of trying to encourage (or discourage) certain behaviors from its citizens. At its most basic level, that offends me, because we’re left at the mercy of lawmakers to decide what they think is appropriate (or inappropriate) behavior. Having said that, I have no problem with people who engage in less healthy behavior paying higher healthcare premiums. It seems only fair to me that if I’m trying my best to live a healthy lifestyle, I shouldn’t… Read more »
warren
warren
7 years 5 months ago

is it me or are a lot of paleofolks libertarians? that would be an interesting post.

Fitness Fabulous
7 years 5 months ago

Its a ‘sensible’ tax – we really need to discourage (excessive) soda drinking.

Russell
Russell
7 years 5 months ago
Great post, Mark. My two cents… I think the slippery slope argument is compelling here given the CW among the gov’t and nutrition “experts” as codified in the USDA food pyramid. It is easy to envision some moralizing, “I know what is best for you” politicians taking the next step and taxing eggs, meats, and other high fat (i.e., unhealthy) foods. A quick Google of “fat tax” yields some sensible and disturbing ideas (note: I live in the UK, and get different search results than those of you in the U.S.) regarding what actually gets taxed under the scheme. It… Read more »
Russell
Russell
7 years 5 months ago
One other thing…Stephanie (comment a few above)* makes a great point about addiction as related to sugar. Taubes raised the addiction idea in his book, and I find it intriguing/persuasive. But all it says to me is that free-will is not what we think it is. We have less control over things than we like to think (or many are able to admit). However, this does not imply that “sin taxes” are the answer. If people are really addicted to sugar, then making it more expensive will not reduce consumption – that economic argument relies on the assumption that people… Read more »
Alan
Alan
7 years 5 months ago

A tax on soft soda pop. You mean another tax. US taxpayers already subsidize agribusiness in order to grow corn to make cheap HFCS.

SerialSinner
7 years 5 months ago

Mark appears to have opened a can of worms. Sin, libertarianism, free-will, morals, addiction, agricultural subsidies…

I share Russell’s concern about the risk of “experts” jumping in and taxing fat and other “bad” foods. And I also agree on that free will starts to lose relevance when it comes to addiction.

I think the discussion leads to a more serious issue though: laws can still be pushed based on paradigms/superstition and not hard facts. And, sadly, big segments of the population will stand by them regardless despite evidence or common sense.

DR
7 years 5 months ago
I have a couple of points to add: – The percentage of smokers has decreased over the years for 2 reasons 1. the public was informed about the link between smokes and cancer 2. the sin taxes imposed upon tobacco products And right now, the public is being informed about the ill effect a high fructose diet has upon our health As more and more people believe this to be true, it will become easier for politicians to enact their fat taxes on beverages sweetened with fructose. My second point concerns the effect of “junk food’ taxation on consumption. The… Read more »
60 in 3 - Health and Fitness
7 years 5 months ago

Perhaps instead of taxing unhealthy food they could simply stop distorting the true cost of junk food and HFCS by eliminating the farm bill and farm subsidies. That would make real food competitive again and increase the price of sweeteners and junk food to where they should be. Plus it would save our government a lot of money and eliminate quite a bit of government interference in the market (yes, I’m a libertarian)

Gal

Dave, RN
Dave, RN
7 years 5 months ago

The gov’t needs to stay out of taxing something because they believe it’s not good for you. Mostly because they are usually wrong, and pander to special interest groups. Look at their food pyramid. Total garbage. They’ll end up taxing fat! I can see it now… 90% hamburger will cost less than 80% fat hamburger because the 80% has more fat in it.

Terry O.
Terry O.
7 years 5 months ago

I think a tax on websites that some citizens don’t approve of would be much FAIRER.

That could tax Mark’s Daily Apple and any others they don’t approve of.

This would generate much needed revenue for cash strapped governments.

KD
KD
7 years 5 months ago
I agree wholeheartedly with Mike and Russell. Although we and the government fully believe sugar is bad for you and people should be drinking less, that’s more a case of a broken clock being right twice a day. The real problem is that the government is wrong about fat, meat, grains and etc and if we paleo-type eaters do not protest the sugar tax, it will be a case of “first I didn’t say anything because it didn’t apply to me” but then eventually, it’s bound to extend to high taxes on butter, high taxes on red meat, high taxes… Read more »
Valda Redfern
7 years 5 months ago

It’s no business of government to determine what we ingest: selective taxes are wrong in principle, no matter how unhealthful the product or practice being attacked. If we accept that the government has the right to make decisions on how we live our lives, then we are rejecting individual rights and making it impossible to establish the truth about what is actually good for us.

SerialSinner
7 years 5 months ago
I don’t get why taxing sugar and using the revenues to pay for associated health issues is a threat to liberty. I get why the tax might fail and why it would be very difficult to implement, yes. But ideally, if implemented properly, all it would do is to make people who eat sugar, not us, pay for their sugar-related issues. In the current scenario all of us are financing gastric bypasses and excess skin removal with our tax money. Why should we be forced to do so? Why not pay instead for what we use only? Libertarianism is not… Read more »
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