by Marion Nestle
May 20 2009

The temptation of soda taxes

David Leonhardt’s column in the business section of today’s New York Times, takes on soda taxes.  It’s starting point is the New England Journal of Medicine article (see earlier post) by Kelly Brownell at Yale and New York City Health Commissioner Tom Frieden, the newly appointed head of the Centers for Disease Control and Prevention .  Leonhardt notes that such taxes are Pigovian (after the economist Pigou): they discourage unhealthful practices and encourage healthful ones.  As he puts it, “In coldly economic terms, you can make a case that calories are the single best candidate for a Pigovian tax.”

Leonhardt finds arguments for soda taxes compelling.  He tried, but could not get any soda company executive to speak to him about them (why am I not surprised).

I’m intrigued by the accompanying illustration.  In the last ten years, the cost of fruits and vegetables has gone way up.  The cost of sodas is way down.  Isn’t something wrong with this picture?  Isn’t now a good time to try to fix it?

Update June 3: Editorial in the New York Times: “While we wait [for bigger fixes], Congress could impose an excise tax on sugary drinks – one of the main culprits in the obesity epidemic.”

20leonhardt-graf01

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  • http://www.forayintofood.blogspot.com/ jennywenny

    Am I missing something? Why cant we tax soda if we tax beer? It seems to be the same to me…

  • Auralee

    We can tax whatever we want to, of course. And we do. It’s a slippery slope. Let’s just hope your favorite food, drink, hobby, pasttime isn’t next on the list of things that someone thinks you shouldn’t eat, drink or do.

  • Curtis

    They should broaden it to a tax on corn syrup. You tax sodas and the soda producers will change their product to be called enhanced bubbly water. Or whatever euphemism they desire.

  • Todd

    I’m fine with this idea. I’ve virtually cut out soda over the past few months, but I was drinking diet before then anyway. I think it also needs to be expanded to things like “vitamin water” and the whole sports drink genre. In fact, I’d most like to see it on the “energy drinks”. Pure gutrot right there.

    I do take one issue with the chart however. I disagree that butter is intrinsically unhealthy. I also doubt that the cost of it has come down so much over the years given how much milk has seemingly gone up.

  • Jennifer

    We don’t need to tax it, just stop subsidizing it through corn subsidies. Which would also increase the price of fast food hamburgers, also a good thing. Honestly, this government is schizoid sometimes.

  • http://casualkitchen.blogspot.com Daniel

    I’m fascinated by that chart because it looks really compelling and it tells such a counterintuitive story. Especially when you think about how much more energy, raw materials and processing costs are imputed into the cost of soda or beer compared to unprocessed fruits and vegetables.

    The problem is, if you actually do the math and calculate the annual percentage change that would make the price of a vegetable increase by 46% compared to something else, it’s only about 1.01% per year. My suspicion is that isn’t a statistically significant change, even though it looks really compelling when rendered graphically. Of course I’d love to see the actual data underlying the chart too.

    And to share my own anecdotal thoughts, I remember buying cans of Coke in vending machines for a nickel in the 70s. Now they cost $1.25 to $1.50. Is it really possible that veggies have increased by *more* than 25-30x in price since then?

    Dan
    Casual Kitchen

  • http://jediknightathais.wordpress.com/ JediKnightAthais

    One of the biggest reasons that soda is cheap and fresh fruits and vegetables are expensive is because the government subsidizes the corn industry. High fructose corn syrup is a common ingredient used in the production of soda. In fact, the sweeteners are the most expensive ingredients in soda. So if the government subsidizes corn and high fructose corn syrup is made from corn, then the syrup is relatively cheap and it keeps down the cost of soda.

    Unfortunately, the government does not subsidize those industries that produce things that are truly healthier and more nutritious than that which comes from the subsidized corn, wheat, and soy industry. That would be fruits and vegetables. I find this ironic because, on the new food pyramid (which can be found at http://www.mypyramid.gov), the government pushes people to increase their intake of fruits and vegetables. The practice of subsidizing corn, wheat, and soy production while not subsidizing the healthier fruit and vegetable industry while recognizing that increasing fruit and vegetable intake will improve the health of the people shows how ignorant the government is in regards to the needs of the people. It also shows what industries are lining the pockets of our representatives in the government.

  • Anonymous

    Yep, let’s tax soda while we pay subsidies to the corn growers who produce the raw materials for HFCS. That makes a lot of sense.

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  • Daniel Ithaca, NY

    Here is a great segment on the topic of a soda tax. It gives great perspective of how little of a burden it will really be as well as how Fox Skews really exaggerates what this really is.

    http://www.colbertnation.com/home
    Also, special guest Michael Pollan!
    Highlights:
    “It’s a 1/4¢ per ounce tax on soda-pop. Why shouldn’t I blow my brains ou!t?”
    “Let me break down the math for you, nation. Let’s say I go to a movie and spend $3.50 for a 20 ounce Coke because I got the ‘Super-saver’. So now if this tax goes through I’ll have to pay 5¢ on top of that. Now the syrup in that soda water costs 2¢. So instead of paying the present 175 times what the drink is actually worth, now I’m supposed to pay an outrageous 177.5 times what it’s worth? For what? Some poor woman’s pre-natal check ups? : Basic human decency!!”

    WHO LOSES? the corporations might sell a little bit less soda; people who choose to spend money on soda pay a couple cents more each time

    WHO WINS? this is a great source of funding for healthcare from a beverage that may be the clearest culprit of nutritional problems, since we know soda has no nutritional value. It’s only a source of extra calories/sugar or not-so-natural/healthy sweetners which we could do without. Wins? people without insurance/adequate insurance and those that choose to consume less sugared/artificially sweetened beverages due to this tax
    AND those paying into a healthcare system that is becoming a greater burden on taxpayers each year

    ANONYMOUS just made a super point, why promote through subsidies and then tax much of the resulting product?
    Furthermore let’s STOP subsidizing ALL corn. It’s pretty silly to subsidize things we know we would be better off consuming less of, that is the HFCS & the factory farm animals fed this taxpayer funded corn. Shouldn’t we be a bit ashamed subsidizing corn at such a high rate when fruits & vegetables have historically been a low-priority “other” category in Farm Bills?

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  • Daniel Ithaca, NY
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