Soda tax
Encyclopedia
A soda tax or soft drink tax is a tax
or surcharge
on soft drinks. It may focus on sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, and sports and energy drinks).
As an example of Pigovian tax
ation, it may aim to discourage unhealthy diets and offset the economic costs of obesity.
, obesity has been a growing problem and seems to have reached epidemic proportions in the last few years. Soda consumption has been noted as a contributing factor to the obesity epidemic and medical costs related to obesity are about $147 billion a year. In 1994 the soda tax idea was introduced by Kelly D. Brownell, Director of the Rudd Center for Food Policy and Obesity at Yale
. In 2009, 33 US states had a sales tax on soft drinks.
To counter the problem of children's easy access to soft drinks, in 2005 the American Beverage Association began working to remove soft drink machines from US primary schools (children aged six to fourteen), and to replace soft drinks with healthier beverages such as orange juice or milk. High schools would have a 50/50 balance of machines dispensing soft drinks and healthier alternatives. Although orange juice may have a few more calories than cola, it also has other nutrients and fiber.
In 2009 the American Heart Association
reported that the soft drinks and sugar sweetened beverages are the largest contributor of added sugars in Americans’ diets. Added sugar
s are sugars and syrups added to foods during processing or preparation and sugars and syrups added at the table. Excessive intake of added sugars, as opposed to naturally occurring sugars, is implicated in the rise in obesity, and the AHA adds that no more than half of a person’s daily discretionary calorie allowance should come from added sugars.
Support for a soda tax has been higher when pollsters say the money will go towards health care. A Quinnipiac University poll released in April 2010 found that New Yorkers opposed a state tax on soda of one penny per ounce by a 35 point margin, but opposition dropped to a margin of one point when respondents were told the money would go towards health care. A Thompson Reuters poll released in the same month found that 51 percent of Americans opposed a soda tax, while 33 percent supported one.
Similar proposals to the New York initiative have been floated without success in at least 10 other cities or states, including Philadelphia, Vermont, Mississippi, Kansas and Alaska.
taxes, the American Beverage Association
, the largest US trade organization for soft drink bottlers, has spent considerable money to lobby Congress. The Association's annual lobbying spending rose from about $391,000 to more than $690,000 from 2003 to 2008. And, in the 2010 election cycle, its lobbying grew more than 1000 percent to $8.67 million. These funds are helping to pay for 25 lobbyists at seven different lobbying firms.
An industry group called “Americans Against Food Taxes,” backed by juice maker Welch's, soft drink maker PepsiCo Inc, the American Beverage Association, the Corn Refiners Association, McDonald's Corporation and Burger King Holdings Inc is running national advertising and conducting lobbying to oppose these taxes.
In the case of New York's effort to introduce a tax, although the positive health message was supported some groups like the New York Academy of Medicine and editorial writers, groups such as New Yorkers Against Unfair Taxes, set up by beverage companies, grocers, teamsters who represent drivers and production workers and others, lobbied against the measure. The anti-tax forces argued that the tax was based on dubious science, because obesity was a matter of how many calories people consumed, not where those calories came from.
The idea that the soda tax would cut into the income of poor New Yorkers while doing nothing to improve their access to exercise or fresh, affordable, healthy food was echoed by some advocacy groups for the poor. For example, Triada Stampas, the director of government relations for the Food Bank of New York City, testified against the tax before a Senate committee.
PepsiCo’s world headquarters is in Purchase, N.Y., and lawmakers in the Westchester County area and in districts with bottling companies of all kinds quickly lined up against the tax. The economic argument swayed even with some Democrats who otherwise tend to favor taxation.
In New York, the opposition managed to put a negative spin on the idea almost from its inception in the 2009 budget proposal. The tax that the governor’s allies referred to awkwardly as a “sugary beverage tax” became known in the vernacular as “the fat tax,” which sounded like a rebuke to anyone concerned about their weight. Related TV ads from "New Yorkers Against Unfair Taxes", , made the case that the tax would hurt consumers. In the ad, a mother was shown unpacking groceries as her son mixes a powdered lemonade, one of the drinks that would be taxed. “Tell Albany to trim their budget fat and leave our groceries alone,” the mother says.
By most accounts, the beverage industry has outspent the pro-tax side and succeeded in painting the soda tax as a naked money grab cleverly disguised as a health policy. Estimates of the amount spent by the Alliance for a Healthier New York, in support of the tax, range from $2.5 to $5 million. The American Beverage Association spent $9.4 million in only the first four months of 2010 to oppose New York’s soda tax, according to a search of public lobbying records by the New York State Healthy Eating and Physical Activity Alliance. Most of the money was spent on advertising, media and strategy.
Some opponents suggested New Yorkers would try to evade the tax by buying soda on Native American reservations, where some smokers go to find tax-free cigarettes, or by crossing the border to New Jersey, harming New York retailers.
Proposed benefits of the tax include:
in March 2010. The study found that a 10 percent tax on soda led to a 7 percent reduction in calories from soft drinks. These researchers believe that an 18 percent tax on these foods could cut daily intake by 56 calories per person, resulting in a weight loss of 5 pounds (2 kg) per person per year. The study followed 5,115 young adults ages 18 to 30 from 1985 to 2006.
An April 2010 study published in the medical journal Health Affairs
found that small taxes on soft drinks do little to lessen soft drink consumption or prevent childhood obesity, but larger taxes probably would. The study's author said that if taxes were about 18 cents on the dollar, they would make a significant difference in consumption.
A 2009 study in the journal Contemporary Economic Policy determined that a percentage point change in a soft drink tax would affect body mass index (BMI) by a very small amount—about 0.003 points. Research from Duke University
and the National University of Singapore released in December 2010 tested larger taxes and determined that a 20 percent and 40 percent taxes on sugar-sweetened beverages would largely not affect calorie intake because people switch to untaxed, but equally caloric, beverages. Kelly Brownell, a proponent of soda taxes, reacted by stating that “[t]he fact is that nobody has been able to see how people will really respond under these conditions.”
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
or surcharge
Surcharge
A surcharge may mean:*an extra fee added onto another fee or charge** Fuel surcharge, sky freight charges which represents additions due to jet fuel prices.** Bunker adjustment factor, sea freight charges which represents additions due to oil prices....
on soft drinks. It may focus on sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, and sports and energy drinks).
As an example of Pigovian tax
Pigovian tax
A Pigovian tax is a tax levied on a market activity that generates negative externalities. The tax is intended to correct the market outcome. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity...
ation, it may aim to discourage unhealthy diets and offset the economic costs of obesity.
Background
In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, obesity has been a growing problem and seems to have reached epidemic proportions in the last few years. Soda consumption has been noted as a contributing factor to the obesity epidemic and medical costs related to obesity are about $147 billion a year. In 1994 the soda tax idea was introduced by Kelly D. Brownell, Director of the Rudd Center for Food Policy and Obesity at Yale
Rudd Center for Food Policy and Obesity at Yale
The Rudd Center for Food Policy and Obesity is a non-profit research and public policy organization devoted to improving the world’s diet, preventing obesity, and reducing weight stigma. Located in New Haven, Connecticut at Yale University, the Rudd Center was co-founded in March 2005 by benefactor...
. In 2009, 33 US states had a sales tax on soft drinks.
To counter the problem of children's easy access to soft drinks, in 2005 the American Beverage Association began working to remove soft drink machines from US primary schools (children aged six to fourteen), and to replace soft drinks with healthier beverages such as orange juice or milk. High schools would have a 50/50 balance of machines dispensing soft drinks and healthier alternatives. Although orange juice may have a few more calories than cola, it also has other nutrients and fiber.
In 2009 the American Heart Association
American Heart Association
The American Heart Association is a non-profit organization in the United States that fosters appropriate cardiac care in an effort to reduce disability and deaths caused by cardiovascular disease and stroke. It is headquartered in Dallas, Texas...
reported that the soft drinks and sugar sweetened beverages are the largest contributor of added sugars in Americans’ diets. Added sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
s are sugars and syrups added to foods during processing or preparation and sugars and syrups added at the table. Excessive intake of added sugars, as opposed to naturally occurring sugars, is implicated in the rise in obesity, and the AHA adds that no more than half of a person’s daily discretionary calorie allowance should come from added sugars.
Support for a soda tax has been higher when pollsters say the money will go towards health care. A Quinnipiac University poll released in April 2010 found that New Yorkers opposed a state tax on soda of one penny per ounce by a 35 point margin, but opposition dropped to a margin of one point when respondents were told the money would go towards health care. A Thompson Reuters poll released in the same month found that 51 percent of Americans opposed a soda tax, while 33 percent supported one.
Proposals
There have been a number of proposed taxes on sugary beverages in the US, including:- In a 2009 "Perspective" piece in the New England Journal of Medicine, Kelly D. BrownellKelly D. BrownellKelly D. Brownell is an American scientist, professor, and internationally renowned expert on obesity. Brownell is Director of the Rudd Center for Food Policy and Obesity at Yale, where he is also Professor of Psychology and Professor of Epidemiology and Public Health...
, PhD, Director of the Rudd Center for Food Policy and Obesity at YaleRudd Center for Food Policy and Obesity at YaleThe Rudd Center for Food Policy and Obesity is a non-profit research and public policy organization devoted to improving the world’s diet, preventing obesity, and reducing weight stigma. Located in New Haven, Connecticut at Yale University, the Rudd Center was co-founded in March 2005 by benefactor...
, and Thomas R. Frieden, MD, PhD, Director of the U.S. Centers for Disease Control and PreventionCenters for Disease Control and PreventionThe Centers for Disease Control and Prevention are a United States federal agency under the Department of Health and Human Services headquartered in Druid Hills, unincorporated DeKalb County, Georgia, in Greater Atlanta...
, argue for taxing sugared beverages. The authors propose that sugared beverages may be the single largest cause of the obesity epidemic. They state that an excise tax of one cent per ounce would reduce consumption by more than 10%.
- New York State budget proposals for 2009 included an 18% sugary drink tax, which was later abandoned.
- Washington State has imposed a 2-cents-per-12-ounce tax on carbonated beverages since 2007.
- Washington, D.C., and Colorado removed sugared beverages from the list of groceries that were exempt from sales taxes.
- Maryland and Virginia are two of 33 states that levy sales taxes on soda. Maryland taxes soda at a rate of 6%, while Virginia’s rate is 1.5%. Virginia is also one of six states that impose a state excise tax on soda in addition to a sales tax.
Similar proposals to the New York initiative have been floated without success in at least 10 other cities or states, including Philadelphia, Vermont, Mississippi, Kansas and Alaska.
Lobbying
Fighting the creation of soft drinkSoft drink
A soft drink is a non-alcoholic beverage that typically contains water , a sweetener, and a flavoring agent...
taxes, the American Beverage Association
American Beverage Association
American Beverage Association is a trade organization that represents the beverage industry in the United States. Its members include producers and bottlers of soft drinks, bottled water, and other non-alcoholic beverages....
, the largest US trade organization for soft drink bottlers, has spent considerable money to lobby Congress. The Association's annual lobbying spending rose from about $391,000 to more than $690,000 from 2003 to 2008. And, in the 2010 election cycle, its lobbying grew more than 1000 percent to $8.67 million. These funds are helping to pay for 25 lobbyists at seven different lobbying firms.
An industry group called “Americans Against Food Taxes,” backed by juice maker Welch's, soft drink maker PepsiCo Inc, the American Beverage Association, the Corn Refiners Association, McDonald's Corporation and Burger King Holdings Inc is running national advertising and conducting lobbying to oppose these taxes.
In the case of New York's effort to introduce a tax, although the positive health message was supported some groups like the New York Academy of Medicine and editorial writers, groups such as New Yorkers Against Unfair Taxes, set up by beverage companies, grocers, teamsters who represent drivers and production workers and others, lobbied against the measure. The anti-tax forces argued that the tax was based on dubious science, because obesity was a matter of how many calories people consumed, not where those calories came from.
The idea that the soda tax would cut into the income of poor New Yorkers while doing nothing to improve their access to exercise or fresh, affordable, healthy food was echoed by some advocacy groups for the poor. For example, Triada Stampas, the director of government relations for the Food Bank of New York City, testified against the tax before a Senate committee.
PepsiCo’s world headquarters is in Purchase, N.Y., and lawmakers in the Westchester County area and in districts with bottling companies of all kinds quickly lined up against the tax. The economic argument swayed even with some Democrats who otherwise tend to favor taxation.
In New York, the opposition managed to put a negative spin on the idea almost from its inception in the 2009 budget proposal. The tax that the governor’s allies referred to awkwardly as a “sugary beverage tax” became known in the vernacular as “the fat tax,” which sounded like a rebuke to anyone concerned about their weight. Related TV ads from "New Yorkers Against Unfair Taxes", , made the case that the tax would hurt consumers. In the ad, a mother was shown unpacking groceries as her son mixes a powdered lemonade, one of the drinks that would be taxed. “Tell Albany to trim their budget fat and leave our groceries alone,” the mother says.
By most accounts, the beverage industry has outspent the pro-tax side and succeeded in painting the soda tax as a naked money grab cleverly disguised as a health policy. Estimates of the amount spent by the Alliance for a Healthier New York, in support of the tax, range from $2.5 to $5 million. The American Beverage Association spent $9.4 million in only the first four months of 2010 to oppose New York’s soda tax, according to a search of public lobbying records by the New York State Healthy Eating and Physical Activity Alliance. Most of the money was spent on advertising, media and strategy.
Some opponents suggested New Yorkers would try to evade the tax by buying soda on Native American reservations, where some smokers go to find tax-free cigarettes, or by crossing the border to New Jersey, harming New York retailers.
Purposes of the tax
Richard F. Daines, the New York State health commissioner has argued that such a tax would be good for society, especially children and teenagers who would be deterred from a lifelong soda habit. He often equated the campaign against sugary drinks to the campaign against tobacco.Proposed benefits of the tax include:
- To decrease consumption of soft drinks.
- To generate revenue for relevant health needs: improving diet, increasing physical activity, obesity prevention, nutrition education, advancing healthcare reform, etc.
- Reduce environmental impacts of soft drink manufacture, distribution and consumption.
Economics of the tax
The U.S. Department of Health & Human Services reports that the tax could generate $14.9 billion in the first year alone.Scientific studies
Taxing soda can lead to a reduction in overall consumption, according to a scientific study published in the Archives of Internal MedicineArchives of Internal Medicine
The Archives of Internal Medicine is a peer-reviewed medical journal published twice a month by the American Medical Association. The Archives of Internal Medicine was established in 1908 and covers all aspects of internal medicine, including cardiovascular disease, geriatrics, infectious disease,...
in March 2010. The study found that a 10 percent tax on soda led to a 7 percent reduction in calories from soft drinks. These researchers believe that an 18 percent tax on these foods could cut daily intake by 56 calories per person, resulting in a weight loss of 5 pounds (2 kg) per person per year. The study followed 5,115 young adults ages 18 to 30 from 1985 to 2006.
An April 2010 study published in the medical journal Health Affairs
Health Affairs
Health Affairs is a peer-reviewed healthcare journal established in 1981 by John K. Iglehart. It was described by The Washington Post as "the bible of health policy". Health Affairs is indexed and/or abstracted in PubMed, MEDLINE, EBSCO databases, ProQuest, LexisNexis, Current Contents/Health...
found that small taxes on soft drinks do little to lessen soft drink consumption or prevent childhood obesity, but larger taxes probably would. The study's author said that if taxes were about 18 cents on the dollar, they would make a significant difference in consumption.
A 2009 study in the journal Contemporary Economic Policy determined that a percentage point change in a soft drink tax would affect body mass index (BMI) by a very small amount—about 0.003 points. Research from Duke University
Duke University
Duke University is a private research university located in Durham, North Carolina, United States. Founded by Methodists and Quakers in the present day town of Trinity in 1838, the school moved to Durham in 1892. In 1924, tobacco industrialist James B...
and the National University of Singapore released in December 2010 tested larger taxes and determined that a 20 percent and 40 percent taxes on sugar-sweetened beverages would largely not affect calorie intake because people switch to untaxed, but equally caloric, beverages. Kelly Brownell, a proponent of soda taxes, reacted by stating that “[t]he fact is that nobody has been able to see how people will really respond under these conditions.”
See also
- Fat taxFat taxA fat tax is a tax or surcharge that is placed upon fattening foods, beverages or individuals. As an example of Pigovian taxation, a fat tax aims to discourage unhealthy diets and offset the economic costs of obesity....
- Center for Science in the Public InterestCenter for Science in the Public InterestCenter for Science in the Public Interest is a Washington, D.C.-based non-profit watchdog and consumer advocacy group focusing on nutritional education and awareness.-History and funding:...
- Liquid CandyLiquid CandyLiquid Candy: How Soft Drinks are Harming Americans' Health is a report published by the Center for Science in the Public Interest which examines the increasing levels of soft drink consumption in the United States, particularly by children and teenagers, and the health problems this poses...
- Bottled water phenomenon
- Container deposit legislationContainer deposit legislationContainer-deposit legislation is any law that requires collection of a monetary deposit on soft-drink, juice, milk, water, alcoholic-beverage, and/or other containers at the point of sale...