Is it Time to Tax Soda?By Adam Dougherty, MPH, MS II
IN THE LAST LEGISLATIVE SESSION, Assembly member Bill Monning (D-27) introduced AB669, a bill that would have imposed a one-cent-per-ounce surcharge on every soda and sugar-sweetened beverage sold in California.
The revenue generated would have created the Children’s Health Promotion Fund, raising a projected $1.7 billion a year for programs that have suffered from the state budget crisis — like school lunch programs and physical education programs. Funds could also have been used to develop new programs targeting obesity prevention in children and enhancing community parks and other targeted endeavors.
While the bill ultimately died in Committee, the concept may gain traction over the next several years. Is a soda tax a realistic solution? Here are some numbers to consider from the California Center for Public Health Advocacy (CCPHA), as well as from Michael Pollan, a 2010 member of the TIME 100 Most Influential People roster:
- Per capita soda consumption has increased nearly 250 percent over the last 30 years.
- Added sweeteners represent 16 percent of the average daily dietary intake.
- Since 1985 the percent of personal income spent on food has decreased from 15 percent to 10 percent. Conversely, the real price of fruits and vegetables has increased by 40 percent while the real price of packaged food and soft drinks has decreased by 25 percent.
- In California, 56 percent of adults and 28 percent of children are obese or overweight.
- An estimated $41 billion is spent every year in California as a result of chronic disease costs in the obese, most notably diabetes.
It is hard to argue against the fact that obesity rates have reached epidemic proportions. Skeptics of a new levy may see this as just another “tax and spend” maneuver, but it is important to understand that the health and productivity costs associated with complications from obesity are astronomical.
Since the beverage industry has benefited significantly from a rise in consumption, the argument goes that they should pay their fair share to address the epidemic. More so, a concerted effort to target this risk factor would likely pay off in savings in the long term — both in community ratings for health insurance (your premiums) and in Medicare costs (your taxes). Authors of a recent Health Affairs study found that a penny-per-ounce Sugar-Sweetened Beverage Tax would lead to significant reductions in morbidity, mortality, and health care costs, estimating that an ensuing 15 percent decrease in consumption annually would prevent 2.4 million diabetes person-years, 95,000 coronary heart events, 8,000 strokes, and 26,000 premature deaths, while avoiding more than $17 billion in medical costs.1
Food Costs Play a Role in Diet
Also worth exploring is the following premise: Food prices are a significant contributing factor in regard to the above trends; and people, especially low-income individuals, are cost-conscious in what they purchase. Research has shown that food costs play a significant role in diet and consumer behavior, and overall economic factors may be a much larger influence than lifestyle or personal will.2
Simply put, the current system is geared to make the unhealthiest calories in the marketplace “the most-bang-for-your-buck” for the bottom half of all income earners. This is the group who already has the highest obesity rates.
Consider this relationship between energy density of selected foods and energy costs (in $/Megajoule) in the image below.
The question of whether a soda tax is “the right answer” or “another horrible idea” will continue to be debated, but it is difficult to contest that the status quo is unacceptable. Already, tax dollars subsidize an unhealthy system, which public health departments are trying desperately to combat. Specifically, taxpayer-supported agricultural subsidies for products such as corn, soybeans, and wheat have decreased the price of energy-dense foods. As a result, we receive cheaper, ultra-sweetened but lower quality food such as manufactured high fructose corn syrup. The Farm Bill thus subsidizes obesity to the tune of $25 billion a year.
Attractively Dense Foods Are Also The Cheapest:3
Curbing the Obesity Epidemic
In order to truly curb the obesity epidemic, it will be necessary to examine quality and health “costs” in addition to quantity and market costs in food production. The Farm Bill is up for reauthorization in 2012, and it would be smart to make food quality a bigger factor, nutritionally and fiscally. Shifting subsidies to healthier food products would not only promote better choices in the market as a whole, but would effectively link health to social productivity, efficiency, and a proper return on investment on public dollars.
The long-term consequences of the obesity epidemic cannot be understated. The average life expectancy has stagnated for the first time since recording began, and health care costs continue to grow at an unsustainable pace. Strategies to combat the epidemic must be multi-factorial, and occur through strong public-private partnerships.
A modest fee on one of the greatest culprits would not only help raise funds to better target obesity, but also justify the issue as a top priority to reduce future health care costs. The experiment in Denmark is worth watching, where the country recently implemented a surcharge on foods containing more than 2.3 percent saturated fat.
At the very least, there should be recognition that today’s reality of public health dollars spent on fighting an epidemic that is propped up by misguided publicly-funded food subsidies is irrational and wasteful. Consumers will continue to search for the best value (calorie) per dollar. Though ultimately personal choice decides what food is purchased, it is of the utmost importance for future policy to protect and promote our nation’s health and wellness, particularly through the nutritional value and affordability of our food products.