The Sugar Bomb

We have an obesity epidemic in the U.S. The evidence is overwhelming and the health and financial consequences are vast and threatening. There have been numerous efforts to fight this problem, but one being tried in many locales is to use the persuasive power of almighty dollar to wean people off high sugar foods that have been indicted as a major factor.

The idea is to tax unhealthy foods. The increased cost, if sufficient, would presumably push consumption toward more healthy but cheaper alternatives. At the same time the revenue can assist in dealing with the current impacts of obesity on social services. This makes sense. It is hardly a new concept. We have long used the tax code to promote desired results, either persuasively or punitively.

Now the Mayor of Philadelphia is proposing a 3 cent tax on sugary soft drinks. The only difference is that he is targeting the proceeds on preschool support. This is a bit disconnected but it still achieves a worthwhile social goal.

Sugar-in-Soft-Drinks

Why do I mention this? It isn’t because I oppose it, but rather as a consequence of what one of the affected Philadelphia retailers said. Why just sugary drinks? Why not candy, cakes, and all the myriad of sugar bombs in our diets? Obviously he was making that argument from self interest, since he noted that 40% of his profit derived from soft drink sales. (That’s a bit scary, isn’t it?) But still, doesn’t he have a good point? If there is no way to substitute an alternative sugar fix, at least not without added cost, perhaps we can truly begin to wean ourselves off this drug.

But, as with many such usages of the taxing power, the devil is in the details. The sales price of most items is roughly proportional to the amount of product provided; larger containers cost more. However, a tax based on sales price might have the perverse effect of motivating producers to raise the sweetness level of their products so that a sugar fix can be satisfied with a smaller drink. With most soft drinks, the cost of ingredients is a small fraction of the retail price.

One other counterargument relates to fairness. The added costs will differentially burden the poor. But political correctness shouldn’t prevent us from recognizing that they represent a major part of the obesity problem. Obesity exists at all social levels, but the affluent tend on average to be thinner and healthier. So focusing the effort on the poor makes sense, at least from a health perspective. Nevertheless, I am uneasy about using the power of government to coerce those who carry so many other burdens, even if there are good intentions.

 

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