An Argument Against The Soda Tax

21 May

Back before health reform became law, one of the biggest problems Congress had to solve was how to pay for it. They came up with lots of ideas, some of which are now law, some of which were discarded entirely, and others which didn’t make it into the law, but are still garnering a lot of interest and support from a variety of stakeholders. One of the ideas in this last category is a proposal to levy a tax on the manufacturers of soft drinks like Coca-Cola and Pepsi.

The thinking is fairly straightforward: Overconsumption of sugary soft drinks plays a major role in the obesity epidemic. So, a tax on the product has the potential to raise significant revenue while combating one of our society’s most plaguing health problems. If you want to get a better look at the data behind this argument, you should check out David Leonhardt’s piece in the New York Times. The “public good” argument–and let’s face it, I live in a School of Public Health–is a convincing one.

As for the soft drink industry, it is fighting hard against such a tax for the obvious reason that it stands to cut into corporate profits. This won’t be because the companies have to pay a tax–they’ll pass those costs on to consumers–but because the consumers will end up purchasing less of the companies’ products. From the perspective of shareholders–and I should go on record as saying that I (as a proud Georgian) own a bit of Coca-Cola stock–reduced profits are a bad thing.

So, given my own personal competing interests in this issue, you might be asking where I stand. In that case, I suggest you revisit this post’s title. I think the soda tax is a bad thing and here’s why:

Unlike traditional sin taxes on products like alcohol and cigarettes, a soda tax would apply to a product for which there is no surgeon general’s warning nor legal restrictions regarding its purchase. In effect, a soda tax would affect an overwhelming number of people. This is one of the reasons why groceries are taxed at a much lower rate than other goods. Of course, one might then argue that soft drinks are not like other groceries in that they are not essential for life. Food and water are really all we need if you get down to it, and the reduced grocery tax should apply only to those items.

I can think of a great number of things one buys at a grocery store that ought also to be taxed if we start taxing soft drinks. These would include coffee, tea, certain types of “juice”, potato chips, frozen pizzas, donuts, cookies, and so forth. We do not require any of these things to live, consuming too much of any of them will lead to obesity or other health problems, and thus, they should be subject to additional taxation. In fact, the only things that would perhaps be rightfully excluded from such a tax would be those very essential items–here I am thinking of things that one can buy with food stamps or as part of the WIC program–like eggs, milk, cheese, and bread. You know, all the things southerners buy in droves when severe weather threatens.

Then, too, there’s the issue of what happens to diet soft drinks. Presumably they do not contribute to the obesity epidemic because they are very close to calorie-free. Would they be taxed? If not, I might warm to a soft drink tax just a little more–and hold out hope that they invent a calorie-free Cheeto. Until then, I remain opposed to taxing anything that becomes harmful only through a gross lack of personal responsibility. Having said that, I apologize to my liberal friends, and ask my conservative friends to pick their jaws carefully up off the floor. Have a great weekend!

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Posted by on May 21, 2010 in Uncategorized


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