Tax Your Way Thinby Jennifer Gibson, PharmD | April 20, 2009
The obesity epidemic in the United States has stirred emotions and inspired calls for public health initiatives to get American thin. The idea of food taxes on sugar-sweetened drinks levied to curb the consumption of such beverages is discussed in an article published by the New England Journal of Medicine. The idea of an excise tax on junk food is not new, but is up for debate again as states look for ways to reduce expenditures and increase revenues in tough economic times.
Currently, more than 40 states impose higher food taxes on sugary beverages and snacks, but larger taxes — a penny-per-ounce tax is discussed in the NEJM article — have recently been proposed. The taxes have the potential to generate large revenue for states, and most supporters hope that the tax would be earmarked for campaigns to fight overweight and obesity, particularly in children. The intake of sugar-sweetened beverages is associated with increased body weight, poor nutrition status, and the displacement of more healthy foods. This, in turn, leads to an increase in diabetes, stroke, heart disease, high blood pressure, asthma, pregnancy complications, depression, and countless other diet-related medical conditions.
In the past decade, the United States per capita intake of calories from sugary beverages has increased by 30%. Beverages now account for 10-15% of the total calories consumed by children and adolescents. One study reported that for each serving of a sugary drink consumed each day, the likelihood of a child becoming obese increases by 60%. One factor contributing to the dramatic increase in consumption is the affordability of so-called junk food. On average, high-calorie, high-fat convenience foods are less expensive than the lower-calorie, nutrient-rich fruits, vegetables, and lean proteins that are essential to a healthy, balanced diet. (Couple that with the nearly $2 billion that soft drink manufacturers spend on marketing and advertising –- a large majority of which is aimed at children under 12 years old –- and it is no wonder there is no shortage of buyers for soft drinks and related junk food.) A tax on foods of poor nutritional value aims to make healthier foods appear more affordable and reduce the consumption of the apparently more expensive junk food. The one-penny-per-ounce tax on sugar-sweetened beverages discussed by the authors of the current article claim it would reduce consumption by 13% (2 servings of sugary drinks per person per week), and raise more than $1.2 billion in revenue in New York State alone.
There are many shortcomings to an excise tax on junk food. Such a tax could unfairly burden the lower socioeconomic groups –- the largest consumers of unhealthy convenience foods, but also the group most largely affected by diet-related diseases. Intuitively, this group needs the most help and would derive the most help from a healthier diet –- even if the government forces their food choices. But, would people automatically stop drinking soft drinks and start drinking water or milk instead? Not likely, without proper education on nutrition, health, and fitness. Perhaps this tax would only lead to a change in the proportion of calories derived from drinks versus solid foods. Further, people that are already obese find food more rewarding and reinforcing than do thin people, so the obese would be more motivated to obtain their preferred food or drink, independent of price. Not the least of opponent’s concerns is the ever-present hand of Big Brother in our wallets, pantries, and grocery carts. The government already tells us how much fluoride needs to be in our drinking water, how many vaccinations our children need to receive, and how often we have to wear seatbelts; the government uses public funds to subsidize farms and agriculture and set standards for school lunches. Should they also tell us what food to buy and feed our families?
As far back as the founding of the United States, politicians have posited the idea of taxing non-essential food items. Adam Smith, often cited as the father of modern economics, proposed a tax on sugar, rum, and tobacco in 1776, since these were not necessary for life, but were universally consumed. In his words, these items were “extremely proper subjects of taxation.” Opponents then and now argue that, while tobacco and alcohol are not, in fact, essential for life, food is necessary for survival and should not be singled out for a specific tax. Still, overweight and obesity have consequences for those who do not consume them, as do tobacco and alcohol. Each year, the United States spends more than $79 billion treating overweight and obese patients, and Medicare and Medicaid (that is, taxpayers) incur more than half of the total cost. Additionally, complications of overweight and obesity lead to lost productivity, increased absenteeism from school and work, poor academic performance, and reduced overall fitness of children and young adults, including military recruits: problems that affect us all.
Price does influence food purchases. Several studies have shown that manipulating price in vending machines, cafeterias, and restaurants influences food choices, leading to less consumption of high-calorie, high-fat foods, and more consumption of nutrient-rich foods. Obesity is more than an economic issue and a single intervention, such as an excise tax on junk food, is unlikely to shrink the waistline of America, but it is one option in the fight against overweight and obesity that may have limited benefits. Would a new tax on food bring us closer to a nanny state, or help Americans live healthier, more productive lives?
Brownell, K., & Frieden, T. (2009). Ounces of Prevention — The Public Policy Case for Taxes on Sugared Beverages New England Journal of Medicine DOI: 10.1056/NEJMp0902392
Chriqui JF, Eidson SS, Bates H, Kowalczyk S, Chaloupka FJ. State sales tax rates for soft drinks and snacks sold through grocery stores and vending machines, 2007. J Public Health Policy. Jul 2008;29(2):226-249.
Drewnowski A, Darmon N. The economics of obesity: dietary energy density and energy cost. Am J Clin Nutr. Jul 2005;82(1 Suppl):265S-273S.
Epstein LH, Dearing KK, Paluch RA, Roemmich JN, Cho D. Price and maternal obesity influence purchasing of low- and high-energy-dense foods. Am J Clin Nutr. Oct 2007;86(4):914-922.
Powell LM, Chaloupka FJ. Food prices and obesity: evidence and policy implications for taxes and subsidies. Milbank Q. Mar 2009;87(1):229-257.
Schroeter C, Lusk J, Tyner W. Determining the impact of food price and income changes on body weight. J Health Econ. Jan 2008;27(1):45-68.
Rudd Center for Food Policy and Obesity. Soft drink taxes: Opportunities for public policy. New Haven, CT: Yale University; February 2009.
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