Originally published in MedPage Today
by Kristina Fiore, MedPage Today Staff Writer
Soft drinks and other beverages loaded with sugar should be taxed as a public health hazard, much as cigarettes are, a group of prominent medical researchers says.
Since extensive evidence ties sugary drinks to an epidemic of obesity and related health problems, such as heart disease and diabetes, they should be taxed to curb consumption and help pay for increasing healthcare costs, said David S. Ludwig, MD, PhD, of Children’s Hospital Boston.
Ludwig is one of the authors of the sugar tax proposal, published online today in the New England Journal of Medicine.
“It’s a very large and growing problem,” Ludwig said. “And given the massive budget deficits we have in Washington, we need to raise money somehow. If we target a product like sugar-sweetened beverages, we get two benefits — increasing federal revenue while at the same time diminishing risk for obesity.”
The proposal calls for an excise tax of “a penny an ounce” for beverages that have any added caloric sweeteners, Ludwig said. It would be levied on producers and wholesalers rather than on retailers, which would make it “easier to collect and enforce,” the researchers said.
A sales tax, on the other hand, would only “encourage the purchase of lower-priced brands, or of large containers that cost less per ounce.”
They estimated that the tax would increase the price of a 20-ounce soft drink by 15% to 20%, and would generate about $14.9 billion in the first year alone.
Taxes at the state level would also generate considerable revenue, they said — about $139 million in Arkansas, $183 million in Oregon, $221 million in Alabama, $928 million in Florida, $937 million in New York, $1.2 billion in Texas, and $1.8 billion in California, according to their estimates.
The money could be used to help support childhood nutrition programs, obesity-prevention programs, healthcare for the uninsured, or to help meet general revenue needs, they said.
An alternative to the proposal would be to tax beverages that exceed a threshold of grams of added caloric sweetener, or added kilocalories per ounce, the researchers said. They recommended setting that level at one gram of sugar per ounce.
The proposal, not surprisingly, drew criticism from food industry representatives.
“Taxes on soda are a distraction that won’t address the real problem facing overweight Americans — an epidemic of inactivity,” J. Justin Wilson, an analyst at the Center for Consumer Freedom, said in a statement.
“The American people overwhelmingly oppose it and science shows that it will have little to no impact on our weight.”
Last week, Wilson’s organization, which represents the snack food and restaurant industries, released the results of a poll it conducted on taxes on soft drinks. It said 65% of Americans don’t approve of such taxes, and only 28% said the tax should be levied to curb consumption.
That contrasts with figures of a national poll that the researchers cited in their proposal, which suggests public opinion has increasingly favored a beverage tax, from 33% in 2001 to 54% in 2004.
Barry M. Popkin, PhD, of the University of North Carolina, also an author of the proposal, said it does indeed face tough industry challenges.
“It will not hold up now to industry pressures,” Popkin said. “But after the U.K. and a number of other countries finalize their tax [policies], it will help shift the environment.”
Popkin would not elaborate on the policies beyond saying that the U.K. is “considering” a similar proposal.
Lugwig was more optimistic about enacting such a policy.
“It’s government, not industry, that determines taxation rates,” Ludwig said. “The government’s primary responsibility is to the public.”
Many other diet and nutrition experts favor the policy. But some go on to say that a beverage tax is only a small component of the larger fight against obesity.
“Fast food, candy bars, and countless other snack foods are likely equally culpable,” said Martin Binks, PhD, director of the diet and fitness center at Duke University.
“Perhaps we should be considering a more comprehensive approach to the issue. Perhaps if we targeted the majority of ‘high energy density foods,’ we could achieve a more global impact.”
David Katz, MD, MPH, of Yale University, said the next step might be to “link measures of nutritional quality to the costs of foods, so that costs come down as nutritional quality rises.”
“In general,” Katz said, “I prefer the idea of providing a financial incentive for those making a good choice to a disincentive for those making a bad choice.”
They also say the proposal goes too far by likening soft drinks to cigarettes.
“Even ‘bad’ food is not tobacco,” Katz said. “Tobacco can be avoided altogether — and indeed should be — thus, steep taxation is justifiable. Food cannot be avoided, so it comes down to choices. Taxing people into choices is fraught with challenges and hazards.”
That logic has played a role in exempting sugary beverages, along with food, from sales tax in many states. Ludwig said this practice should be eliminated, whether or not an excise tax is enacted, “so that we’re not subsidizing soft drinks.”
In the 33 states have that do tax soft drinks, the mean tax rate of 5.2% is “too small to affect consumption and the revenues are not earmarked for programs related to health,” the researchers said.
To counter some of the expected criticism, the researchers pointed out that seat-belt laws and tobacco taxes don’t eliminate accidents and heart disease, but are “nevertheless sound policies.”
“Soft drinks stand out as unique adverse aspect of diet for several reasons,” Ludwig said. “They are consumed massively. The evidence base linking [them] to obesity and poor diet quality is much stronger than it is for other classes of foods. Most other foods, even junk foods, have some redeeming values when compared to sugar-sweetened beverages — which are just 100% sugar and coloring, flavoring, and preservatives.”
The researchers concluded in their proposal that “taxes on beverages that help drive the obesity epidemic should and will become routine.”
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I don’t have a problem taxing anything that contributes to the higher burden these issues cause to the health care system overall. The “sin” taxes can help mitigate the costs that “sinners” cause to society. Ride a motorcycle, higher taxes for taking a risk that will likely lead to thousands of dollars in extra health care costs to society. Eat fast food, pay a fast food tax for the obesity/atherosclerosis that occurs which increase the “health care insurance base” for all americans. Smoking/alcohol/marijuana. Make/keep it legal, and tax it. Soft drinks (all-diet&non diet since diet sodas have nutrasweet which has been shown to lead to all kinds of health problems) – tax them. Don’t forget sugary drinks like Kool-aid. I realize the net for foods that are bad for you is large, but since eating poorly increases the cost of insurance for everybody, taxing it and using the money to defray these high costs is not a horrible idea.
Of course, the slippery slope is that when will it end? Will chocolate bars be taxed? How about french restaurants? Pizza places? The taxing potential is limitless. What is considered healthy?
The issues are not as cut and dry as they appear. But I do think “sin” taxes have some merit. The just require more specific consideration than occur currently.
Bad idea. People should be free to abuse themselves if they aren’t directly hurting others. Maybe we should all re-read Mill’s “On Liberty.” Moreover, there is no good evidence that shows that good health habits save society money in the long run. Indded, there is some evidence that sickies cost society less money because they die earlier. So making them pay sin taxes in the meantime is quite unjust.
With all due respect to the authors, my very first thought when reading this was the naiveté evident in Dr Ludwig’s statement:
‘ “It’s government, not industry, that determines taxation rates,” Ludwig said. “The government’s primary responsibility is to the public.” ‘
I’m not sure of the number or sizes of the lobbies that would bring to bear multi-millions of dollars to counter such an effort. However, I have little doubt they would be sufficient to kill this for some time to come, the current debate on health [care || insurance] reform notwithstanding. How willing does Dr. Ludwig think legislators from Georgia, the home of one of the word’s largest cola companies, would be to support a tax on that company’s primary products.
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