"Soda Tax" on Sugary Soft Drinks

In an attempt to curb the obesity epidemic and create a new stream of revenue to fund health care programs, many health experts are joining the fight for "sugar tax". The New England Journal of Medicine on Wednesday amplified calls for a tax on sugar-sweetened beverages, arguing that there is evidence such a measure would help to reduce rates of diet-related diseases and health-care costs.

The proposed "sweet beverage and soda tax" is one penny per ounce. Currently, 33 states have sales taxes on soft drinks (average tax rate of 5.2%), but the taxes are too small to affect consumption and the revenues are not earmarked for programs related to health.

"A penny per ounce would have a seriously negative impact on the industry, as it could potentially raise prices on key packages by 40% to 50%," said John Sicher, editor and publisher of Beverage Digest, an industry publication.

What's interesting is the concept of applying a sin-like tax for soda and sugary beverages. The concept behind sin taxes is to curb certain behavior or "pleasure" lifestyles by taxing them; examples include gambling, alcohol, tobacco and so on. The issue here is that sugar is found in abundance in more than just soda and sweet beverages so why are they targeting one particular industry? And even more troubling is what additional political agendas are going to be targeted by lifestyle taxes?

Kevin Keane is the spokesman for the American Beverage Association and he says there is no comparison between soft drinks and cigarettes. "Tobacco kills, directly and irrefutably," he said. "Soft drinks don't. You can be a healthy person and have a soft drink. You can't say the same about smoking. The public gets that."

What do you think? Will a soda tax and an increase in the cost to purchase your favorite sweetened beverage deter you from drinking them? Do you think the extra cost in general will help people lose weight?

-dr

Posted To: Tax Rants by David Rocci By: David Rocci On: Friday, September 18, 2009
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