Tax Break

The slippery slope of a sugar tax

February 14, 2012

A recent study on the effect of taxes on sugary beverages is bound to give the soda industry’s lobbyists a headache.

Professor Annette Nellen, who teaches at San Jose State University and blogs at 21 Century Taxation, wrote last week about a new study on the link between a soda tax and lower diabetes rates. The report said:

Over a ten year period (2010-2020), the penny-per-ounce tax could reduce new cases of diabetes by 2.6%, as many as 95,000 coronary heart events, 8,000 strokes, and 26,000 premature deaths.

Still, Nellen said she is skeptical of soda taxes because it uses the tax code to play favorites. Why should sodas be considered “bad” while juices and other sugar drinks could dodge the tax?

Levying taxes to channel behavior is a slippery slope, she said. Why stop with sugar? Too much salt and saturated fat are unhealthy as well.

Nellen wrote in 2008 about a tax New Mexico proposed in 2008 on video game and television sales.

Still, there is strong evidence about the negative health consequences from sugar (see this Reuters story from January).

Finally, take a look at this report from the Chicago Federal Reserve last March that examines who would be affected by a sugar tax.

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