Proposed Soda Tax to Fund Obama Health Care Reform

Sumptuary or sin taxes are common on alcohol and cigarettes, but do sugary sodas fall into this same category? The Obama administration has proposed a sin tax on sodas to pay for health care reform. Of course, the beverage lobby opposes the tax claiming it would unfairly target lower income families. Supporters of a soda tax believe it would deter consumption and improve Americans’ health.

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Proposed soda tax would fund health care reform

The proposed soda tax would apply to more beverages than just Coca-Cola and would only amount to several cents per can or bottle. Energy drinks, sports drinks, fruit drinks, and teas would be targeted based on their caloric content. Like other sin taxes, supporters of the soda tax believe it would not only help fund health care reform, but it would help relieve the burden of taxpayers to provide obesity care by deterring consumption. The Wall Street Journal explains:

Proponents of the tax cite research showing that consuming sugar-sweetened drinks can lead to obesity, diabetes and other ailments. They say the tax would lower consumption, reduce health problems and save medical costs. At least a dozen states already have some type of taxes on sugary beverages, said Michael Jacobson, executive director of the Center for Science in the Public Interest.

“Soda is clearly one of the most harmful products in the food supply, and it’s something government should discourage the consumption of,” Mr. Jacobson said.

Many states have or have tried to impose taxes on sodas. New York Governor Paterson recently dropped a proposal for an 18% tax on sugary beverages because of opposition, but there are already 40 states with small taxes on sweetened drinks. Public opinion polls in New York revealed 52% of citizens supported a “soda tax”; however, that number rose to 72% approval if the revenue was used for obesity prevention. People seem to understand the relationship between the tax and the benefit, which would be vital for gaining support of a federal excise tax on sugary beverages.
According to “Ounces of Prevention — The Public Policy Case for Taxes on Sugared Beverages“:

Sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, such as sports and energy drinks) may be the single largest driver of the obesity epidemic. A recent metaanalysis found that the intake of sugared beverages is associated with increased body weight, poor nutrition, and displacement of more healthful beverages; increasing consumption increases risk for obesity and diabetes; the strongest effects are seen in studies with the best methods (e.g., longitudinal and interventional vs. correlational studies); and interventional studies show that reduced intake of soft drinks improves health. Studies that do not support a relationship between consumption of sugared beverages and health outcomes tend to be conducted by authors supported by the beverage industry.

The most powerful beverage lobby represents Coca-Cola, Kraft Foods, and PepsiCo.

Obama’s comprehensive overhall of America’s health care system is estimated to cost $1.2 trillion. A three cent tax on sweetened beverages would raise $24 billion over the next four years. A few cents is not much to pay to improve our health care system. President Obama has stated, “When it comes to health-care spending, we are on an unsustainable course that threatens the financial stability of families, businesses and government itself.”