More on taxing soft drinks and food ingredients harmful to your health....

Today's Post: Friday, 3-12-2010

Recently, there was an article about how New York has proposed a very modest tax on soft drinks.

Since one of these stories was on ABC new, it had many comments that I was able to read.

This post is in part to say why taxes on soft drinks five times as much as New York’s proposal are justified AND to speak to the points made in opposition in those comments.

A. One of the themes in the opposing comments was the belief that taxing bad foods and drinks was not effective.

First, here’s what was in my previous similar posts.:

This was in my post on Friday, 2-26,2010, two weeks ago.

That post reported a study that found that taxing bad foods WAS effective in lowering the calories in the groceries people bought and increasing the consumption of healthier foods.

The effect was large enough to cut the excess fat of the average adult in the United States about in half!

B. My posts also point out that taxing soft drinks and food ingredients and foods that make people fat and sick raises money for cash strapped governments without slowing the economy or causing people to lose their jobs while increasing the other kinds of taxes tends to do just that.

From the United States government to local cities most governments today are now extremely pressed for cash and revenues.

Yes. Governments can cut service levels and programs; and they have been.

But cutting back on things like libraries, parks, education, programs for pregnant women and babies and preschool children, and public health and public safety cause real harm now and later and definitely would be best avoided. Cutting back some kinds of health programs can even directly kill people and does. Cutting back on supporting mass transit not only harms people who have less money and harms the economy, it tends to increase driving and air pollution.

Governments can also increase the dickens out every possible kind of fee and they have been. Permits cost more as do traffic tickets – increasingly a LOT more – than they used to cost.

But whether young or old or less educated or less fortunate many people find these higher fees a problem because they are already themselves short of money.

Governments could raise their sales taxes by a lot and some may do so. But even though sales taxes are the easiest to be sure you can collect and tend to be fair since everyone has to pay them, doubling them or more will slow the economy and tend to impoverish people.

So that’s not a great idea either unless the taxes were very low to begin with.

The federal government and the states can also increase income taxes, particularly – at least on paper – on higher income earners. But that tends to cause collection problems and also tends to slow the economy and lower people’s standard of living if overdone.

There is some evidence that having capital gains taxes at all slows the economy and tends to prevent efficient changes in the economy by disincentivizing property transfers. It also tends to penalize people for inflation. Increasing them is an even worse idea.

Yet with virtually every part of their revenue down from the severe recession, hard-pressed governments have to do something to compensate!

But since these other alternatives they have often cause as many problems as they solve and many worsen the economy besides by therefore tending to reduce the governments’ revenues even more, wouldn’t it be nice if there were a way governments could raise more revenues without slowing the economy?

It’s not yet being used as much as it could be and should be; but there are several taxes that could be implemented that by making health harming actions cost more would not only raise the revenue the governments need but not slow the economy and would in fact increase it by sharply cutting health care costs.

It is as yet not as well recognized or used as it will be; but many kinds of food and drinks can and should be taxed for exactly that reason.

So far, since most people really don’t yet have a clue how dreadfully bad for you it is to drink soft drinks and to eat junky commercial desserts and snacks but do know they are enjoyable and everyone they know consumes them and likes them and any for one single serving, are modestly priced.

By contrast taxes on soft drinks and these junky foods tend to get vigorously opposed because these people simply have no idea what the consequences are.

But as of the news last Wednesday, 2-24, that is about to change big time!

Leaders in business, medicine, public health, and government know that health insurance rates and medical costs are going up enough to significantly slow and harm the entire economy. Worse, now that so many younger people are fat, the trends are for this bad situation to get even worse.

So, if it were definitely proven that taxes on the soft drinks and foods responsible for the sharp increase in fatness and obesity would help reverse that, it’s simply a matter of time until every bit of this junk is taxed everywhere.

The exciting news day before yesterday is that just exactly that HAS now been demonstrated to be the case!

C. Every can, bottle, and plastic container of soft drink consumed, however good it tastes, makes the person drinking it fatter than they should be. At a time when few people have the kind of continuously active lives we were evolved to live, this is making people fat and sick and costing our economy billions to treat the avoidable diseases it largely causes. Worse, diet soft drinks tend to make people consume extra sugar from other sources. ALL soft drinks should be taxed at least 5 cents an ounce everywhere in the United States.

For similar reasons, sugar, high fructose corn syrup, refined grain flour, and all artificial sweeteners should also be taxed separately.

This would also reduce the consumption of junky snacks and commercial desserts.

Is this justified? You bet it is! If both things were done, our future health care costs might well drop in half or more.

Such taxes have been proven to reduce consumption. And it is the very people, the young, the poor, the uneducated who don't know any better who consume the most, who also cut back the most due to lack of funds.

If this is not done and soon, our present economic misery will seem mild, because of the huge, ADDITIONAL, run-ups in health care costs we will otherwise experience!

Warren Buffett points out that overly high health care costs are already like a cancer working to destroy and drag on the prosperity of our economy.

Without such taxes everywhere and soon, these avoidable health care costs will double.

Guess what THAT will do to our economy!

If you like soft drinks, when they are taxed, people like you may drink enough less -- and on the average they will -- that they will be less likely to get type 2 diabetes, high blood pressure, and heart disease.

D. And because they won't get these diseases, their freedom FROM needing to take drugs with obnoxious side effects and extra doctor visits and added medical costs will INCREASE. They will be more likely to be freed from these consequences they would otherwise have to deal with.

The people who say that such taxes don't reduce consumption clearly WANT to believe that. The studies on taxes on cigarettes, alcohol, and recently one on soft drinks and similar junky food show repeatedly and conclusively that such taxes DO cut consumption.


In fact, the revenues from such taxes make it far LESS likely for them to be banned outright. Some of the damage this junk causes will simply be built-in to the price so most people will consume less of them But they can choose to consume them anyway.

Additionally, unlike sales taxes on ALL purchases or tripled traffic fines or higher income taxes, choosing to buy these things that harm your health is completely voluntary. Those other taxes are collected from everyone whether they like it or not.

But taxes on soft drinks are completely different. If you want to pay only half as much of such taxes, just buy only half as many of them.

Even better, if you want to pay no taxes at all of this kind, they are completely avoidable. There ARE other things in life that are enjoyable, that quench your thirst, that taste good, or that contain caffeine to wake you up. People who have sex, drink water, eat strawberries, or drink tea or coffee instead but buy no soft drinks will pay NONE of these taxes.


So, in many, many ways people will be MORE free when we have such taxes.

They’ll be freer to have a job in strong economy.

There will be some taxes they can choose to pay less of or even none at all.

They will be at least partly freed from increases in taxes they HAVE to pay.

They will be partly freed from horribly high health care costs and often from personal suffering, costs, and inconvenience due to avoiding diseases they would otherwise get.

E. Now that each of these facts is becoming known to leaders in government, business, medicine, and public health --AND they are now being proposed all over the world, I think it is inevitable that such taxes will be everywhere. And, those that are already in place will likely go up.

They work. They produce revenue for governments in a way that improves their economy instead of harming it. And, compared with the alternatives, they INCREASE freedom of choice.