Argument for soda tax all washed up

This solution is as clever as it is wrong. Slapping a tax on soda to reduce obesity will have about as much effect on the collective waistline as the last fad diet had on mine: none at all.

More to the point, the very thing that makes sin taxes, or the soda tax, so successful at generating revenue is that they rarely achieve the desired health effects for which they are ostensibly adopted. This is because the degree to which people change their behavior in response to a tax varies widely depending on how high the tax is and how sensitive consumers are to the change in price. Consider Arkansas and West Virginia – both states levy taxes on soda; both rank very poorly in obesity, 10th and 3rd respectively. Are the residents of these states measurably better off—any less obese—because they pay higher prices for pop?

It’s practically impossible to project any positive health effects of the soda tax due to the plethora of high-calorie substitute beverages available to consumers. As noted in a recent report by my colleague at the Mercatus Center, Dr. Richard Williams, someone who swaps a Pepsi for an apple juice, milk or lemonade is actually consuming more calories than before. Exactly how beneficial to one’s waistline is a policy that potentially shifts consumption to from a can of soda to a beverage that has more calories?

While the range of soda taxes varies from state to state, it’s safe to say that whatever rate the politicians come up with, it will never be high enough to stop everybody from buying soda. After all, if the tax worked, people would stop drinking soda and it wouldn’t raise any money at all. In other words, the notion that the true purpose of the soda tax is to make people healthier is all wet.

In obesity politics, it’s easy to single out and demonize certain foods and beverages, of which sugary sodas are apparently the easiest target. But political cooks in the state policy kitchens should take this particular morsel off the menu. Unfortunately, it’s not likely to happen: sin taxes are the hardest temptation for legislators to pass up.

Rob Raffety is Associate Director of Regulatory Studies and Government Accountability for the Mercatus Center at George Mason University.