Save Lives, Tax Soda

Let's make 2012 the year we get smart about taxes, and tax less of those things we want more of, like jobs and income, and more of the things we want less of, like health damaging sugars. You can have your cake, just pay for it.
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Forty-five can be a sizeable number. Especially when it's the number of gallons of sweet beverages the average American consumes in one year. This jolting news was reported in a new study published in the January 2012 issue of Health Affairs.

How much sugar comes with all that? About 4,500 teaspoons per person per year just from soda. Consumption of beverages high in calories but poor in nutritional value is the number one source of added sugar and excess calories in the American diet. It's also fueling America's soaring obesity and has pushed diabetes to the top of the charts; it's now #7 on the "cause of death" list.

More than one-third of U.S. adults (over 72 million people) and 17% of U.S. children are obese. The crushing health care costs associated with obesity - estimated to be as high as $147 billion a year - prompted the U.S. Centers for Disease Control and Prevention (CDC) to list reducing the intake of sugary drinks as one of its chief obesity prevention strategies in 2009.

As an intervention, several states and cities, including California and New York City, have considered a tax on soda, but have yet to impose one. Maybe now they might. The new study, led by Kirsten Bibbins-Domingo, MD, PhD, an associate professor of medicine and of epidemiology and biostatistics at University of California, San Francisco (UCSF), estimates that a penny-per-ounce tax on sweetened beverages would prevent 240,000 cases of diabetes per year.

On top of that, the researchers calculate, nearly 100,000 cases of heart disease, 8,000 strokes, and 26,000 deaths would be averted over the next decade, for a cost savings of $17 billion.

A penny-per-ounce tax would add 78 cents to the price of a standard 2-liter bottle of soda. Depending on where you bought it, you could pay 25 to 100 percent more for that economy-sized bottle. That may seem to tip the scales too much, but as a 2004 report prepared for the Department of Agriculture explains, for "sinful-food" taxes to change the way people eat, they may need to equal at least 10% to 30% of the cost of the food.

And what sort of revenues would the tax generate? Bibbins-Domingo and her team project $13 billion per year would be raised from a one cent per ounce tax on soda. Those revenues could be used to extend health insurance coverage to the uninsured and under-insured, or perhaps to fund campaigns intended to make healthy foods more widely available, and more affordable, and to encourage exercise and healthy eating habits.

A recent national poll found that 53% of Americans said they favored an increased tax on sodas and sugary soft drinks to help pay for healthcare reform. And even among those who opposed such an idea, 63% switched and said they'd favor such a tax if it "would raise money for health-care reform while also tackling the problems that stem from being overweight."

I'd like to see the U.S. really face the serious consequences of our out-of-control obesity epidemic and consider tough interventions, like a soda tax, or a fat tax as is spreading in Europe. According to a report in allgov.com, Europe is beginning to embrace the concept of a “fat tax” in an effort to reduce obesity and its associated health care costs. In September of 2011, Hungary, with a 19% obesity rate, imposed a tax on packaged products with high sugar, salt or caffeine levels. This includes energy drinks with added sugar and caffeine, soft drinks with added sugar and soup and gravy mixes. The Hungarian government estimates it will collect $100 million a year from the food tax. It will apply the funds to the nation’s health care budget.

Now Denmark has followed with the first-ever tax on foods high in saturated fat. The fat tax, which will be levied on wholesalers, will come to about $6.27 per pound of saturated fat. This will mean an added 40 cents to a hamburger and 12 cents to a bag of chips.

According to the The LA Times, Denmark's fat tax isn’t aimed at curbing obesity - the obesity rate in Denmark was 13.4% in 2009, below the European average of 15.5%. But Denmark lags in terms of life expectancy, and the country hopes the measure will increase the average lifespan by three years over the next decade.

Imagine that sort of initiative on the part of our U.S. Congress. Ah heck, don't bother. But maybe in some state house or in a city council, a civic-minded leader is saying right now, "We've got a real problem here. We've got people who are obese costing our health system $1,429 more per person than normal-weight people. They're less productive at work and absent more. That's hard on our businesses, and it's breaking our treasuries. We know soda is a major contributor to obesity. Let's not take the soda away, but let's price it so less is consumed."

That's what we could do, though it is not how our tax system works now. Today, as Derek Thompson of theatlantic.com explains, forty percent of federal taxes come through the payroll tax, which raises the cost of employment. Another 40 percent comes through individual income taxes, which hurt income. Less than five percent comes from excise taxes and zero percent comes from consumption taxes.

"What's dumber than a tax on cake?" Thompson asks. It's the system we've got now.

I say, let's make 2012 the year we get smart about taxes, and tax less of those things we want more of - like jobs and income - and more of the things we want less of - like health damaging sugars. You can have your cake, just pay for it.

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