Soda Tax: Sin Tax or Super Tax?

You may have heard a lot about the so called ”soda tax” (Sugar Sweetened Beverage (SSB) Tax) over the past year and be a little unclear as to the meaning of it. Well, the soda tax varies greatly depending on the specific legislation in a community, if they even have it. In general, the soda tax would tax a small charge on each soda, fruit drink, sports drink, and other SSBs. SSBs are the target because they have been identified as the largest contributor of excess (discretionary) calories and one of the main factors in the development of obesity. They contribute no nutritional value except for calories. But, to be clear: the main goal of this tax is to raise money, direct obesity prevention is a small and unlikely benefit politicians are hoping for (and they do know that this tax will most likely not prevent obesity). However, a main proposal for use of the revenue generated from a sin tax is to use the funds for obesity-prevention campaigns... which would be a way to indirectly reduce obesity rates from the Soda Tax.

According to Michael Jacobson from the Centers for Science in the Public Interest (CSPI): ”Beverage companies market more than 14 billion gallons of calorie-laden soft drinks annually. That is equivalent to about 506 12-oz. servings per year, or 1.4 servings per day, for every man, woman, and child.” Just a one cent tax on a 12-oz soda would generate an estimated $1.5 billion annually. Higher taxes would generate more revenue and be more likely to decrease soda consumption (since most people would not decrease their spending if a Coke costs $1.50 instead of $1.49).

A recent study out of Duke University found that a 20% increase on SSB sales tax would result in a daily consumption of 6.9 fewer calories, and 0.7 lbs/yr per person. A 40% tax would generate weight loss up to 1.3 lbs/yr/person. However, the study found that middle income families would see the most benefit from this tax (by benefit I mean weight loss), as high income households are likely to be unaffected by increased prices and low-income groups would wait for sales to purchase or buy generic brands (although I am unsure as to why generic brands would avoid the tax?).

The debate surrounding this topic is prevalent…. some think the government is taking too much control, and where will the taxing stop? You can’t tax every food that “might” contribute to weight gain, and also, who determines which foods are “bad”?? Another argument, which I think is less impressive, is the notion that this tax “disproportionately affects the poor (b/c they buy more SSBs than the higher class). I disagree, only because no one is forcing lower income households to purchase SSBs (and they can purchase Diet soda for a cheaper price if they are really craving soda, or drink free tap water!).

The other argument is that this is one way to generate a ton of revenue and help get our country out of a financial crisis. If obesity is a secondary effect of the tax, fabulous! Then we can save even more money from the healthcare bills associated with obesity. Other pro-arguments say that a 1-2 cent tax really won’t make a difference for people buying soda…… and they shouldn’t be buying it in quantities that would make those 1-2 cents add up to a significant amount. Oh, another thing: most states already have soda and candy taxes, people are just unaware of it. Pennsylvania already has a 6% tax on soda (and some for chips/pretzels) from grocery stores and vending machines. See: http://www.statehealthfacts.org/comparemaptable.jsp?yr=92&typ=2&ind=696&cat=1&sub=9&sortc=2&o=a to check out your state.

So, it is up to you to decide your stance on the soda tax. I just gave you a small summary of the debate, so I hope you take the time to look into the research for yourself… instead of making hasty decisions or agreeing with your favorite political news correspondent.

Sources:

1. Eric A. Finkelstein, Chen Zhen, James Nonnemaker, Jessica E. Todd. Impact of Targeted Beverage Taxes on Higher- and Lower-Income Households. Arch Intern Med., 2010;170(22):2028-2034. DOI: 10.1001/archinternmed.2010.449
2. http://www.cbsnews.com/8301-503544_162-5009316-503544.html
3. http://www.sciencedaily.com/releases/2010/12/101213163742.htm
4. http://www.statehealthfacts.org/profileind.jsp?ind=696&cat=1&rgn=40