July 21, 2006

Soda Tax the Wrong Way to Help Curb Obesity

(This article originally appeared in the July 21, 2006 edition of the Denver Post.)

Thanks to a decision this week, Aurora City Councilman Bob Fitzgerald’s plan for a fat-busting tax on soda has fizzled out. But not for long.

Last Monday, a panel of business leaders gave Fitzgerald’s ill-conceived plan for a 1-cent soda “obesity tax” a unanimous thumbs-down, prompting him to withdraw the plan.

But within minutes, Fitzgerald promised to revive the issue next year. “This is still a good idea,” he told reporters.

But for several reasons, Fitzgerald’s soda tax never was – and never will be – a good idea for fighting obesity.

The most obvious reason is that soda, by itself, isn’t making us fat. According to numbers from the U.S. Department of Agriculture, regular soda consumption has been falling every year since 1998, but at the same time obesity has skyrocketed. In 2004, we actually drank less soda per person than in 1995, long before obesity was making headlines.

This is no surprise. Soda isn’t the only drink with calories. As reported in a “CBS HealthWatch” story last year, fruit juice routinely has more calories than soda: A 12-ounce bottle of grape soda has 159 calories, while the same bottle of unsweetened grape juice weighs in at 228. Why single out soda?

No matter how Fitzgerald tweaks his soda tax plan, it’s bound to be poorly targeted. The reason is simple: Not all soda drinkers are obese. Soda taxes hurt healthy people who enjoy an occasional soda as well as the obese, making it a lousy way to slim down the public.

Fitzgerald’s original plan taxed only 12-ounce soda bottles and cans, presumably because that’d be easy to administer. But forcing retailers to review labels on every drink on their shelves and charge tax based on fructose levels sounds like a retailer’s tax compliance nightmare.

Besides, if the goal is really to cut soda drinking – and not just an arbitrary tax on the public – why exempt fountain drinks ubiquitous in fast-food restaurants, bars and everywhere else?

Aside from flaws in the tax base, Fitzgerald’s plan for the use of tax revenue made no economic sense. Any well-designed “sin tax” would at least earmark revenue for programs that curb the “sin” being taxed. But Fitzgerald’s plan simply poured revenue into the general fund for programs with zero connection to obesity.

Fitzgerald claimed revenues would keep “recreation centers” open. That’s wishful thinking. Without earmarked funds, there’s no way to stop tax dollars from being hijacked for pork programs totally unrelated to health.

Soda taxes may be new to Aurora, but they’re old hat elsewhere in the country. And almost everywhere they’ve been tried, voters have rejected them.

California was an early pioneer with obesity taxes. Less than a year after its “snack tax” was enacted in 1992, a popular backlash and voter referendum repealed it and barred lawmakers from similar taxes in the future.

Since 1990, soda taxes in six other states and three cities have met a similar fate thanks to widespread voter opposition.

The message is clear: Voters don’t want a tax code that micromanages eating habits.

According to a 2003 Harvard University survey, 59 percent of U.S. adults oppose special taxes on junk food like soda, chips and candy.

In fact, not even America’s health-conscious doctors support soda taxes. In a vote last month, the American Medical Association’s members voted to reject soda taxes, questioning the “appropriateness of the AMA supporting introduction of a new tax.”

Taxes are important because they raise revenue for essential government services. Gimmicks like soda taxes make a mockery of that system, turning the tax code into a playground for lawmakers’ paternalistic lifestyle views rather than a tool for funding programs.

When it comes to obesity, renowned chef Julia Child had it right: “People need to take an adult point of view … eat in moderation, small helpings, a great variety, weight-watching, moderate exercise and have fun.”

Fitzgerald may revise and reintroduce his soda-tax plan as promised, but one thing’s for sure: No amount of tweaking will make it good policy, or do anything to curb the growing obesity problem.

Denver native Sara Cseresnyes is an adjunct scholar and Andrew Chamberlain is an economist at the Tax Foundation in Washington, D.C.