• Soda tax should fizz out
     | February 23,2013

    Nothing makes a politician more creative than the desire to find more money to spend. Members of the Vermont State Legislature are no exception: Representative David Sharpe, D-Bristol, is sponsoring a measure to place a one-cent-per-ounce tax on sugared soft drinks.

    Supporters like Sharpe say it’s a free lunch, with tax revenue coming in and fewer medical expenses going out because the tax will reduce obesity. But it is no such thing: A tax on soda will neither reduce obesity nor cut the medical costs related to it. Rather than raising revenue while making people healthier, the tax is just another financial burden aimed squarely at the middle and working class.

    That’s not only not progressive, but regressive: Soda taxes disproportionally affect poor people. Most shamefully, activists who push soda taxes know this, but try to dodge the issue. In a document drafted after a closed-door session, a senior staffer at the Rudd Center for Food Policy and Obesity — the national soda tax architects — admitted that activists “need to take control of the ‘regressive’ conversation” by “re-framing the message that the tax is not regressive (when technically it is).” So middle-class and low-income consumers will pay more than their fair share, and all the top activists have to offer is the promise of a re-framed conversation. That’s small comfort for higher grocery bills and higher prices for restaurant visits.

    The activists’ messaging solution is an “obesity prevention fund,” and the Green Mountain State should be skeptical that it actually will result in greater spending on programs that will meaningfully fight obesity. Politicians have made and broken similar promises time and time again, choosing to divert money from existing expenditures to their pet projects while shoring up the deficits with “fund” allocations. To use just one example, education officials in many states that earmark lottery profits to education have reported that allocated funds replace rather than supplement existing education spending. Instead of better health, we will see a simple cash grab with the money taken from Vermonters least able to afford it.

    The tax itself certainly won’t reduce obesity. A recent study published in the British Journal of Nutrition found that a tax roughly equal to the one Sharpe’s proposes would cause people to reduce their calorie intake by about three calories. That’s less than one-one-thousandth (0.1 percent) of the calories in one pound of body fat. Anybody who peddled a diet book offering to trim your waistline by less than a pound over the course of a year would be laughed at, but that is the predicted effect of this tax.

    This pathetic reduction in calorie intake and body weight is due to what economists call the substitution effect. As taxed beverages like soda and sports drinks rise in price, people don’t respond by ordering rounds of water. Instead, they find alternatives which are not taxed by Sharpe’s bill or turn to beer. A recent Cornell University experiment found that in households that drank beer, people crowded out the entire benefit of consuming less sugared soda with calories from beer.

    That exposes another flaw with beverage taxes: Sodas don’t uniquely cause obesity. Federal government data show that soft drinks only provide seven percent of our daily calories, and the only way to gain weight is to consume more calories than you burn with physical activity. Soda taxes fail to address other contributors to obesity including physical inactivity.

    Citizens know that they don’t need the state trying to micromanage their beverage choices with sin taxes or New York-style bans. Politicians should realize that obesity needs a holistic and honest solution, not discriminatory and regressive proposals like soda taxes.

    J. Justin Wilson is the senior research analyst at the Center for Consumer Freedom.

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