Monday, March 02, 2009

Rudd report on soft drink taxes

The Rudd Center for Food Policy and Obesity has a very timely report on soft drink taxes (.pdf).

An engaging section at the end offers point-by-point contrasts between what "opponents" and "proponents" say about soft drink taxes. Here are some examples and my comments on them.
Opponents say:
Soft drink taxes are regressive. They will disproportionately hurt the poor and minorities who spend a larger proportion of their income on food.

Proponents say:
Soft drink taxes have the potential to be most beneficial to low-income people, who:
-- may currently consume more soft drinks;
-- may be more sensitive to higher prices and therefore stand to benefit most from reducing consumption.
This is especially true if the revenues are used for programs that
will benefit the poor, or for subsidies on healthier foods which can
offset concerns that the tax is regressive.

While everyone must eat, sugared beverages are not a necessary
part of the diet and generally deliver many calories with little or no
To make the proponents' point even more broadly, it is good public policy to expect the tax system as a whole to be progressive, but it would be bad policy to expect every disaggregated sales tax to be progressive.
Opponents say:
The government should stay out of private behavior. It should not try to regulate what people eat or drink.

Proponents say:
The government is already deeply involved in what we eat, from farm subsidies to setting nutritional standards for school meals. Historically, major government interventions have been successful in improving and protecting the public’s health. Examples include smoking restrictions and tobacco taxes, mandated seat belt usage, fluoridated water, and vaccinations.
It is true that government interventions can promote the public interest. However, on this question about personal food and beverage choices, I'd encourage the proponents to listen very carefully to the opponents' concern. The proponents should spend more ink calling for reforms to misdirected government policies (such as subsidies for inputs to corn sweeteners) than calling for taxes to change public behavior. Public policy to address obesity wins more public agreement when the public strongly senses a heartfelt deference to consumers' own preferences.

Here is a rhetorical argument that proponents can pursue in states where sales taxes are lower for groceries than for other goods: "Soft drinks should be taxed fairly, just like all other consumer goods subject to sales tax. Soft drinks should not be taxed using the special lower tax rate for food necessities. This policy reform does not tell consumers what to do. It merely puts soft drinks in the appropriate category of goods subject to sales tax." In such states, proponents should never get caught in a sound bite that makes them seem more eager to direct consumer choices.
Opponents say:
Soft drink taxes can’t be compared to cigarette and alcohol taxes. The use of tobacco and alcohol can have adverse consequences for non-users (for example, second hand smoke, and drunk driving accidents, called “negative externalities”). This is not true for soft drink consumption.

Proponents say:
Obesity also has negative externalities which affect us all. Among them are significant overall health care costs, including higher medical, disability, and insurance premium costs. For example, obesity-related medical expenditures were estimated in 2002 to be $92 billion, half of which were paid for with taxpayer dollars through Medicaid and Medicare.
The proponents, here, have chosen an argument that may be too broad to win public agreement. By the same argument about shared insurance risk pools, one could justify fairly severe government interventions to influence personal choices that affect health. Contrast this argument with the much stronger public appeal of policies to protect children from soft drink sales and marketing in schools.

At the end of the day, I'd support much stronger public policies to address soft drink consumption and obesity, but the proponents' arguments in this report could be strengthened with some pruning.

1 comment:

Anonymous said...

You're quite right to suggest that the proponents of this tax "could justify fairly severe government interventions to influence personal choices that affect health." I wonder, would they have agreed with the PETA proposal (some time ago) that meat eaters be charged higher premiums? The externalities of the possible heart attack or cancer surely effect us all personally and financially. Like the proponents, PETA should also be railing against the corn subsidizes that make meat (and soda) such a cheap commodity, rather than attacking individual behaviors.

About the PETA proposal: