Marks Daily Apple
Serving up health and fitness insights (daily, of course) with a side of irreverence.
23 Apr

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

The Dope on Energy Drinks

You want comments? We got comments:

Imagine you’re George Clooney. Take a moment to admire your grooming and wit. Okay, now imagine someone walks up to you and asks, “What’s your name?” You say, “I’m George Clooney.” Or maybe you say, “I’m the Clooninator!” You don’t say “I’m George of George Clooney Sells Movies Blog” and you certainly don’t say, “I’m Clooney Weight Loss Plan”. So while spam is technically meat, it ain’t anywhere near Primal. Please nickname yourself something your friends would call you.

  1. 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 are rational actors with perfect information. Sugar addicts are probably not well informed and if they are, and continue to eat sugar, then not rational. So the tax won’t work (unless the whole point is just to raise more revenue for the gov’t and this is an idea that may sell).

    Markets fail. There is no utopia (libertarian or otherwise). But just because markets fail does not imply that gov’t must step in at every failure point to “fix” things. Often, a failed market is better than any other alternative.

    *I take issue with the idea that the tobacco industry created “the right to consume unhealthful products without regulation is a personal liberty” – that idea has been around for a very very long time – see prohibition, and restrictions on hemp, opium, etc. before that.

    Russell wrote on April 24th, 2009
  2. A tax on soft soda pop. You mean another tax. US taxpayers already subsidize agribusiness in order to grow corn to make cheap HFCS.

    Alan wrote on April 24th, 2009
  3. 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.

    SerialSinner wrote on April 24th, 2009
  4. 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 following study showed that a small tax on junk food had little effect on consumption. However, a substantial tax on the same food has a significant effect…especially with low income populations.

    DR wrote on April 24th, 2009
  5. 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)


    60 in 3 - Health and Fitness wrote on April 24th, 2009
  6. 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.

    Dave, RN wrote on April 24th, 2009
  7. 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.

    Terry O. wrote on April 24th, 2009
  8. 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 on bacon, and then we’ll realize we needed to have stopped taxing food at the very beginning.

    Additionally, it irritates me that the government pretends the additional tax is to help people. I believe the government is well aware that people will pay a higher price to get their sweet fix, as I would have when I was drinking regular sodas, and know it’ll be a good source of tax revenue.

    Regarding a lot of paleo people being libertarians, I’d say I’ve found that to be the case, and I think it’s because of two reasons:

    1) Libertarians tend to use logic, reason and look at all sides of an argument before determining a position, including future impact beyond the immediately obvious answer. For example, a liberal/democrat tend to think that universal healthcare should exist because it’s the right thing to do. A libertarian tends to look at all the data and determine if people’s lives would actually improve with universal healthcare and whether it’s actually a feasible thing to be able to accomplish. (Yes, obviously my bias is toward the libertarian angle, I know it shows)

    In much the same way, I think most who have done their homework to find blogs such as this, and read books like PP and GCBC, lean toward wanting more information, more sides of the story, and don’t want to just read that now-infamous Reader’s Digest article and take it at face value.

    2) Paleo-eaters go against mainstream advice and libertarians tend to also have viewpoints that aren’t popular with Democrats or Republicans.

    KD wrote on April 24th, 2009
  9. 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.

    Valda Redfern wrote on April 25th, 2009
  10. 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 a “no taxes, period” fundamentalist doctrine. It’s rewarding communal investment based on paying for what you use, and not paying for what you do not use. If you use a bridge, pay for it’s maintainence. If you don’t, you shouldn’t be forced to pay. Where’s the threat to freedom?

    SerialSinner wrote on April 25th, 2009
  11. I think I have a compromise position: Don’t pass the tax onto individuals, pass it along to the big corporations that push sugar and refined carbs. While I’m somewhat concerned about the “slippery” slope, I’m thinking/hoping that it is easier to tax packaged foods than real foods.

    I also think companies like Nestle should be taxed more for the mess they are creating with bottled water. What a crock!

    Ruth wrote on April 25th, 2009
  12. When you give generally know-nothing government officials the power to tax foods the find inconvenient or dangerous, you give them the power to tax and ban virtually anything based on the logic that persuasive evidence compels them to protect the individual. I live a primal lifestyle. I IF, do functional exercise, and generally abstain from neolithic foods as much as possible. These ideas didn’t come from the government, but from free commerce and discussion.

    However, every now and then, I do like junk food, like a glass of wine, or a rum and coke. You’d be hard pressed to convince anyone that the largely unhealthy, grain eating mass of politicians know more about my health and my well-being than me. And I’d rather not fund their willy-nilly campaigns with my taxes that I could spend on grass-fed beef.

    They’d probably take the 18% tax and give it to farmers to feed corn to their cows, make another version of a propagandizing Food Pyramid, or give it to researchers to find yet another way to transform soy into a food-like product. Better yet, next time they’ll pass a measure to outlaw raw milk on the grounds that it is high fat, or they’ll ban red meat on the grounds of “compelling research” that it is associated with cancer.

    NIcholas Hahn wrote on April 25th, 2009
  13. I’m with pretty much everyone from Mike M to Nicholas Hahn.

    First off it won’t change much, Joe Public will simply wash down their starch sandwiches on toast with Healthy fruit juice, which IMO will make little difference

    If it works they’ll be looking for other things to tax which will be sat fats. I predict this will happen in the UK first

    note the sponsors for the latter two sites and crosscheck with the sponsors of the ADA, AHA, Diabetes UK etc.


    Trinkwasser wrote on April 26th, 2009
  14. Our society thinks we can have our cake and free health care too! News Flash that’s not working!

    We can’t have it both ways, either regulate health from start to finish, or let everyone fend for themselves. It’s not that complicated, we can have a society of healthy people with affordable health care, or we can have a society plagued by unhealthy people and impossible healthcare. But don’t fight regulation and then complain cause we have to share the burden.

    Raeann wrote on April 28th, 2009
  15. Taxing sweet drinks is absolutely ludicrous!!! If the Federal Government simply stopped subsidizing the corn industry we wouldn’t be in this mess. Taxing sweet drinks is essentially taxing high fructose corn syrup, which the government subsidizes.

    Come on people!!!

    Philip Mancini wrote on April 30th, 2009
  16. When has our government shown any sense of responsibility for spending taxation dollars directly on the supposed cause it legislated itself for? Look at programs like the Lottery, etc. where such a small overall percentage actually goes to the education needs of the general child population. Huge amounts are dedicated to “administration, marketing, etc.”.

    Where is the positive trickle down effect from the Federal bank bailouts in regard to the general public? You’d be amazed how many “financial sweeteners” can be in a typical pork barrel program.

    Gary wrote on April 30th, 2009
  17. Here’s a novel idea…instead of making excuses for the government needing more money for this and that, how about the government operating within their budget. Everyone I know has one and is required to stay w/in it since we (private citizens) cannot deficit spend. The gov’t has absolutely no business legislating this garbage and yet we allow them to overstep their bounds constantly. Just because they don’t want to regulate your favorite “vice” is no reaason to allow or support this. Remember, the other side of the “personal liberty” coin is “personal responsibilty”. Got freedom? – Don’t think so!

    Tray wrote on April 30th, 2009
  18. Interesting programme in the UK the other day ‘professor Reagan’s nursery’ which took an objective look at various childrens products. Regarding breakfast cereal, a Kellogg’s spokeperson said “there is absolutely no link between sugar and obesity” and there are studies linking breakfast – of any kind – to increased cognitive performance at school. therefore sugary cereals were accepted by professor Reagan as being part of a good children’s lifestyle.

    If I hadn’t hard of the primal diet I would have accepted what i see on good programmes like this; average people don’t have time to validate everything they see int he medi with scientific research but must accept it at face value.

    watch here for the next 7 days if you are in the UK:…_Nursery/

    alex wrote on May 5th, 2009
  19. Great posts – I’m impressed! Glad to see there is still common sense and freedom loving people out there.

    Shari wrote on May 9th, 2009
  20. If Gov is so concerned with our health
    and wants to discourage us from drinking sugar, then why not just drop the cuurent sales tax on diet drinks. Wouldn’t this encourage us to drink diet and on the other hand save them money they spend on obese people. Do you think Gov would even consider this. No, Gov wants to tap into the big money of soft drinks and have more money and more money to spend spend spend.

    allen tucker wrote on May 14th, 2009

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