Can Soda Taxes Trim The Fat?
Vendors everywhere need to be aware of a growing movement to impose new taxes that could do a lot of damage to their business. As a part of a (possibly) well-intentioned effort to (force) help us all become less obese, legislators everywhere are proposing taxes on soda, and in some cases, candy. The theory is that if these supposed “sin” items are made more costly, we’ll eat and drink less of them, and meanwhile the tax revenue will be used to promote healthy lifestyles. But will it work?
Let’s face it. We are becoming fatter as a nation. The Trust for America’s annual report says that adult obesity rose in 23 states last year. The Center for Disease Control, in a report from their July, 2009 “Fat Summit” reports that obesity prevalence rose 37% between 1998 and 2006, and the rate of obesity has more than doubled in the last 30 years. And according to the CDC, obese people spent on average 42% more on medical costs than normal weight people. So the problem is there. But will taxing soda and candy solve it? Let’s examine this by looking at the proposed taxes on soda, which are what most legislators are considering.
If we want to reduce the number of obese people we should first have an understanding of what makes them that way. Whether a person is obese or not is determined by their Body Mass Index. A person with a BMI of over 30 is considered obese. BMI is determined by several factors, with genetics being responsible for 64% of it. Diet and the amount of physical activity one does are also great determiners of BMI.
The theory is that if taxing it reduces soda consumption, obesity rates will go down. But we know that obese aren’t just drinking soda to get fat. They’re also drinking milkshakes and eating donuts and mashed potatoes and watching TV for hours and not exercising. If taxes are going to be used to reduce obesity rates then they should be used across the board to address all the things that make us fat, right? Therefore we should tax potato chips, chocolate, cheese fries, hamburgers, and ice cream. We should tax people if they don’t exercise. You see where we’re going with this. It very quickly becomes ridiculous. Calories are calories. Sodas are clearly not unique contributors to the obesity problem. In fact, soda consumption is only a small part – about 10% – of the diet of obese people. Singling out soda as the culprit in the obesity problem does not pass the logic test and will not impact obesity rates.
But it’s been tried before so let’s look at a state that has had taxes on soft drinks. Arkansas has had a tax on soft drinks since 1992 – 2 cents for each 12 ounces. The non-profit Center for Science in the Public Interest, itself a proponent of soda taxes, says of the Arkansas soda tax: “Unfortunately existing state taxes are too small to significantly reduce consumption and almost none of the revenues are earmarked for health promotion.”
The University of Chicago did a study called Associations between State-level Soda Taxes and Adolescent Body Mass Index. The study concluded, “Current state-level tax rates are not found to be significantly associated with adolescent weight outcomes. It is likely that taxes would need to be raised substantially to detect significant. Associations between taxes and adolescent weight.”
As Justin Wilson of the Center For Consumer Freedom pointed out in a September 14 article from the New York Daily News:
‘There’s not a single compelling study that suggests taxing sodas at the level being discussed affects levels of obesity. An analysis this year concluded that, to actually make a dent in the obesity rate, Congress would need a 1,200% tax on soda. That means that to truly move the needle, a 75-cent can of soda would have to be taxed $9. (Better hope the vending machine takes $10 bills.)’*
It should also be noted that a February 2009 Mintel report on America’s beverage use shows that soft drink consumption has declined from 2003 to 2008. Yet we’re still getting fatter. And Susan Neely, president of the American Beverage Association points out “Our industry has reduced calories per ounce produced by more than 24 percent since 1998, yet obesity rates continue to climb”.
The bottom line is that taxes don’t promote healthy lifestyles. Again, quoting Susan Neely: “We all want to improve health care, but taxes don’t make anyone healthy. Education, Exercise and balanced diets do that”.
Vendors take note: Your state may not be considering soda taxes now, but they very well could be in the near future. And there is an effort afoot to make a national soda tax, to which President Obama is well disposed. You need to be armed with the facts and make efforts to contact your legislators with the facts and arguments: Soda is not a unique contributor to the obesity problem, taxing people does not educate them on making healthy choices, and soda taxes have been shown not to work to reduce obesity. Keep your eyes peeled on this issue and take action to preserve your business.
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