October 30 2012
Will California's Soda Tax Reduce Obesity?
The Tax Foundation, a Washington D.C. think tank that analyzes the impact of federal, state, and local tax policy, has just released a report on two new soda tax proposals that voters in two California towns will decide on November 6 (IWF Visiting Fellow Lane Scott wrote an excellent opinion piece on the topic here). In a nutshell (and not surprisingly), the Tax Foundation report shows that proposed tax increase would be a regressive burden in an already overtaxed state and would have no observable impact on obesity or weight-related health problems.
The tax proposal on the ballot in Richmond, California would impose a “business license fee” of 1 cent per ounce on soda retailers. El Monte, California politicians have proposed a "sugary sweetened beverage license fee,” of the same amount. According to the Tax Foundation, these proposals are different from other soda restrictions in that while thirty-three states tax soda differently than groceries and while four states already have special excise taxes on soda (Arkansas, Tennessee, Virginia, and West Virginia--which incidentally despite these taxes remain in the top ten obese states in the United States), the proposals in Richmond and El Monte would be the largest taxes on soda in any American city. The penny per ounce levy would add $2.88 to the price of a 24-pack case of soda. That's a lot of money for families already struggling with unemployment, stagnant wages, higher gas prices and already high food costs.
People need to understand that these city-wide tax proposals are becoming very popular with politicians who refuse to cut spending and are eager to find new revenue sources. As Lane mentioned in her piece, it's easy to get behind tax proposals that ostensibly seek to improve the health of children, but voters need to consider the efficiency of these proposals and their impact on people's already burdened bottom line.
If these proposals do not work to reach their intended goal--reducing obesity--then they must be rejected, no matter how well intended these proposals may seem.
Read the entire report here.