Three Reasons to Support a Soda Tax

And now, from the Department of Unsurprising Things: The food lobby is against a soda tax to help pay for health care reform. That's fine. This is a food tax. They are a food lobby. It's their job to scream right now. But let's shelve the politics and look at the policy for a second. A small tax on sugary soda drinks -- and on alcohol -- would be a really good idea. Here are three reasons:



1) The Sin Reason
Sugary beverages account for up to 15 percent of the calories consumed by children, according to the New England Journal of Medicine. The authors wrote that "sugar-sweetened beverages ... may be the single largest driver of the obesity epidemic."

2) The Market Reason
There's a simple reason why sugary drinks and junk food are contributing to the country's obesity epidemic. They're very, very cheap. As this NYT graph below demonstrates, the price of fresh produce has increased by about 50 percent in the last three decades while the price of alcohol, butter and soda has plummeted. The ability of food producers to make delicious, cheap food would be a commendable accomplishment of food engineering, but it's also contributing to a nationwide obesity epidemic. Raising the price of sodas, which plummeted relative to overall inflation in the last 30 years, strikes me as a responsible way to incent consumers to make healthier choices.


3) The Deficit Reason
But let's say it doesn't change anybody's eating preferences. Let's say Americans keep paying a couple cents more for the same amount of Pepsi. Well then fine, I say, at least they're helping to pay down the federal deficit. I hear the argument that a sales tax on soda (or alcohol) would be regressive, taking a larger percentage of poorer people's income and striking at the less fortunate demographic that is more likely to buy lots of soda in the first place. But health care reform would use those billions of dollars -- a 3 cent tax per 12-ounce serving could generate $24 billion in four years -- to pay for Medicaid and health care subsidies for less fortunate Americans, anyway.

This would also be a good time to reiterate that I'd also support a small tax on alcohol. Inflation has eroded the alcohol tax over the last half century. The Center on Budget and Policy Priorities estimates that simply returning alcohol taxes to their 1991 levels would raise another $27 billion in the next ten years. What would that cost us alcohol drinkers? A person who drinks a glass of wine every night "would pay only $10.95 more in alcohol excise taxes over the course of a year," according to the CBPP. In other words, this alcohol tax would cost you one extra glass of Merlot per year.