Look for "Bait and Switch" on Soda Taxes

Posted: June 19, 2012

THIS PAST MONTH has seen a coordinated PR assault against "junk food" in the name of public health.

The Institute of Medicine's 462-page report Accelerating Progress in Obesity Prevention: Solving the Weight of the Nation argues that wide-ranging changes are required, such as promoting physical activity and availability of healthy foods and beverages. The very same week saw publication of a related article funded by the Centers for Disease Control, predicting in two decades 42 percent of Americans will be obese and 11 percent will be severely obese, or 100 pounds overweight.

Public-health advocates (including New York's controversial food-policing mayor) use such reports to elevate soda to the "poster child" of junk food. Not surprisingly, a growing number of local and state governments have begun testing the waters for raising taxes on soda and other sugar-sweetened beverages. Advocates claim that higher taxes will lessen consumption and, to sweeten the pot, they also promise that tax revenues will fund obesity-prevention programs. Evidence is not on the side of the soda-tax advocates, however.

Economists have recently demonstrated that even an enormous 58 percent tax on soda would drop the average body-mass index by only 0.16 points — a trivial effect since obesity is defined as a BMI of at least 30. Research also demonstrates that tax hikes on other "sins," such as alcohol and tobacco, mostly decrease consumption by light users and not heavy users. There is no reason to suspect otherwise in the case of soda.

Raising taxes on soda mostly causes people without weight problems to cut back their consumption. People who consume a lot of soda simply pay higher taxes, substitute into lower-priced soda, take advantage of bulk discounted purchases and/or make more home-brewed sweetened tea. Taxes thus exert little to no effect on those targeted by government as drinking too much soda and other sweetened beverages.

Experience with tobacco-control programs also predicts that few soda-tax dollars will find their way to obesity-control programs. The CDC reported in May that only 2.4 percent of total state tobacco revenues received in 2010 were used for tobacco-control programs. The rest merely funded other state-government programs, despite past promises that tax hikes would more richly fund programs aimed at curbing tobacco use.

Of course, the evidence does not overwhelmingly support claims that tobacco control programs effectively lower tobacco use. Statistical analysis that I have conducted finds a very tenuous link between cigarette sales and tobacco-control programs — less than a pack a year per capita. Using tax dollars to inform us that smoking is unhealthy does not appear to be a very effective strategy when most of us already understand this connection to our health.

Obesity-prevention programs will not be very effective, either, since most overweight people understand that weight gain results from eating too much and exercising too little. Again, providing information people already know is not the answer to our nation's weight problems.

Menu-labeling laws support this fact. A study of New York City's 2008 law on posting calories in restaurants could not detect a change in calories purchased after the law. Moreover, a mandatory calorie-posting study at Starbucks showed little to no effect on drink purchases, although average calories per food transaction fell by 6 percent.

The Big Apple's current proposal to ban the sale of soda and other sugary drinks from restaurants, theaters and concession stands if the serving is greater than 16 ounces is also unlikely to work. After all, people can just double up or buy nonbanned drinks with more calories, such as milkshakes.

The premises for soda taxes are flawed, so expect a "bait and switch" from lawmakers and public-health activists who are advocating for them. It's a win-win for those wanting government to expand its domain over us, but a lose-lose for taxpayers — thin or fat — who stand to reap no gain in public health. n

Michael Marlow is a professor of economics at California Polytechnic State University and the author of "The Myth of Fair and Efficient Government: Why The Government You Want Is Not The One You Get."

|
|
|
|
|