Several weeks ago, New York Gov. David Paterson proposed an excise tax on soft drinks to help bridge that state's $7.4 billion budget shortfall. Paterson's soda tax proposal was one of a long list of revenue-generating and budget-cutting ideas proposed, but predictably was one of the items that got the most attention.
Within hours, Washington-based lobbyists for the industry went to work painting the idea as a scary, radical new thing: Susan Neely, head of the American Beverage Association, called the new tax a "money grab, pure and simple," coming at a time when "New Yorkers continue to struggle through a tough economy with double-digit unemployment rates."
Though Paterson's proposed penny-per-ounce tax would be the highest tax yet on soda pop, the taxes themselves are nothing new. In fact, the state of New York has had a sales tax on soft drinks since 1965, which has poured (ahem) billions into state coffers since. And 32 other states (and Chicago) already have some kind of sales or excise tax on soda.
Georgians certainly don't seem outraged by the four percent tax they pay on soda sold in vending machines. But what should outrage Georgians, New Yorkers and all American taxpayers is the financial harm caused by our out-of-control soft drink consumption. There's no line for it on our tax returns, but on April 15 and out of every paycheck, we're subsidizing the treatment of obesity, diabetes and other expensive health problems made worse by soft drink consumption.
Unlike milk or juice, sugar-sweetened beverages provide nothing but empty calories. I call soft drinks "liquid candy," since they provide plenty of calories without necessary nutrients. Besides promoting obesity and disease, soft drinks displace from the diet real foods with valuable health-promoting nutrients. In fact, in the 1970s, teens drank about twice as much milk as soda. By the 1990s, teens drank almost twice as much soda as milk.
When I was a kid, soda was considered an occasional treat and served in small bottles. Now it's practically the default drink, particularly for young people, and often served by the quart. Our 2005 analysis of government data found that teenage boys who drank soft drinks consumed an average of three 12-ounce cans per day and girls an average of two 12-ounce cans. One in 10 boys who drank soft drinks consumed 5 1/2 12-ounce cans a day, or about 800 calories' worth. It's not the only reason, but the increase in soda consumption since the 1970s certainly helps explain why obesity rates have tripled in children and teens.
The father of free-market economics, Adam Smith, wrote in 1776 that "Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which [have] become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation." Were he alive now, he'd likely propose taxes on soda that would make Paterson's tax look like chump change.
While soda lobbyists shed crocodile tears about the effects on poor consumers of a penny-per-ounce tax, the soda industry is gouging Americans for what is, after all, mostly water and high-fructose corn syrup. In recent newspaper ads, Coke praised itself for offering a new, 90-calorie, 7.5-ounce can. I could buy it at my local supermarket for $3.99 for an eight-pack, or about $8.50 a gallon. But I could buy 12-ounce cans of Coke for as little as $2.45 a gallon. That difference in prices amounts to a "convenience tax" that is as much as 3 1/2 times greater than the tax New York is weighing.
If Coke and supermarkets can ratchet up their profits like that by several cents an ounce, why shouldn't legislators take a penny to help undo the damage that liquid candy causes?
This first appeared in the Atlanta Journal Constitution on April 5, 2010.