To read the news, it would look like soda taxes are just around the corner. First, President Obama mildly suggested in an interview in Men’s Health that soda taxes were worth some consideration. Then Obamafoodorama broke the news of Coca-Cola CEO Muhtar Kent’s reaction to said soda tax:
“I have never seen it work where a government tells people what to eat and what to drink,’’ Kent said. “If it worked, the Soviet Union would still be around.” Kent also called the soda tax “outrageous.”
Whew. The man is pissed. That’s probably why Coke is one of the companies behind the full-page ad in the Washington Post by a new junk food industry astroturf group designed to combat junk food taxes. More from Ob Fo:
The ad… was in the A section of the Washington Post on Sunday, part of a new campaign that lobby group Americans Against Food Taxes is running to fight taxation of soda and sugary beverages, although the plea is “don’t tax our groceries.” Coca Cola funds the group, as does Pepsi Cola, Dr. Pepper, Canada Dry, McDonald’s, Jack in the Box, among others.
And now the NYT has jumped in to the debate with an article which mostly echoes Ob Fo in the particulars. One twist that the NYT adds, however, is the fact that a penny per ounce federal tax on soda would raise $14.8 billion in its first year—that’s a lot of money. It’s also true that a penny per ounce is a pretty steep tax—something like $0.64 to a $1 two-ilter bottle of soda—that’s a much higher figure than I’ve previously heard discussed.
But for all the attention, the prospects of someone actually passing a soda tax are pathetically dim. At present, and despite Obama’s interest, there is not a single significant effort in Congress to establish a soda tax. Efforts at the state level haven’t gotten very far either (“It didn’t look like we had the votes,” complained a NJ state legislator to the NYT on why he pulled his own soda tax bill).
Not that the situation isn’t dire. Marion Nestle reports on the latest study which puts more hard numbers on the soda problem:
The study found that 41 percent of children (ages 2 – 11), 62 percent of adolescents (ages 12 – 17) and 24 percent of adults drink at least one soda or other sugar-sweetened beverage every day. Regardless of income or ethnicity, adults who drink one or more sodas or other sugar-sweetened beverages every day are 27 percent more likely to be overweight or obese.
To paraphrase Nestle, since when did a daily soda (or sports drink, which is just as bad) for kids become the norm? Well, since guys like Kent spent billions in marketing dollars to establish soda as, to quote him, “a staple food.” Imagine if ice cream or candy were called “a staple food.” It would be a joke. And it’s a joke to think of soda that way, liquid candy that it is. Yet millions of Americans clearly do—and that has to change before we’ll get a handle on the obesity epidemic.
It’s true that the effectiveness of a soda tax is still a subject of great debate. Public health officials on the one hand declare it to be a crucial tool in the fight against obesity. Economists, on the other hand, are far more skeptical—although some new work suggests that a person’s feelings of “price sensitivity” at the grocery store, independent of income level, is a strong determinant of food choices and obesity. Regardless, when deciding whom to put in charge of health and wellness policies, public health experts or economists, I find the choice easy. But that’s just me. Still, I think it’s tempting to focus too much on the behavioral consequences of a policy like this and ignore the fact that it generates a giant pile of money. Feel free to believe a soda tax won’t solve obesity. But don’t deny that its revenue will create all sorts of opportunities.
So let’s get back to the money. What struck me is that the $14.8 billion dollars that could be raised from a soda tax far exceeds the total amount spent annually on federal farm subsidies. Yes, most experts want to use any money raised from junk food taxes to combat obesity. But combating obesity isn’t just about public awareness campaigns and diabetes treatment.
It seems to me that a soda tax offers a strategy for the ultimate bit of food system jujitsu—to allow reformers to stop tilting at agribusiness windmills, at least in the near term, and go about building our own. How about dedicating a good chunk of that new money—you know, a billion or two, chump change to the big boys—to subsidizing fruit and vegetables (whether at the producer or consumer level) and developing regional food systems.
Tom Philpott has already complained that the USDA’s new “Know Your Farmer, Know Your Food” campaign is long on aspirations but desperately short on money. And with agribiz once again firmly in control of the Congressional process, we know that the hope of significantly reorienting ag subsidies is dwindling—at least until $200/bbl oil hits the farm sector. But the USDA leadership, along with the White House, do indeed seem committed to the principles enshrined in the KYF2 program. Why not try to coopt at least some of the agribiz interests into supporting them through backing a soda tax. What do they get? Some of them will get more money, of course. But they might also get assurances that current farm policies won’t be thrown out the window. It’s also a strategy that might split the currently united front of industrial growers and industrial processors - let the soda guys scream and yell while we focus on the farmers.
Okay it’s a bit of a pipe dream. And yes, it’s a kludgy solution—it will certainly leave strident anti-subsidy groups like the Environmental Working Group fuming. But resiliency and expediency are important, too. And anything that brings us closer to realizing alternative systems while avoiding open combat with agribusiness needs a good, hard look. I say, why not?
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Comments
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Dave from Canada Posted 12:35 pm
18 Sep 2009
Huh?
Economists are most definitely NOT skeptical about the ability of prices to influence consumer decisions.
The "price elasticity of demand" is a measure of how much demand will be reduced by higher price; increase price adequately, and decisions will change. Price increases have proven extremely effective at reducing tobacco consumption, especially among youth.
I think the only skeptical economists you are likely to find are those funded by AgriBiz and Big Junk.
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Tom Laskawy Posted 12:47 pm
18 Sep 2009
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Dave from Canada Posted 1:09 pm
18 Sep 2009
The problem with the study in that link is that it looked at a price change on "all calories", not on soda or junk food.
When you raise the price across the entire range of a class of essential goods (all food and drink), with no substitutes available, you shouldn't expect to get much demand movement.
When you raise prices on one group (like sodas), and not its substitutes (like water, milk, or other beverages), you will get a move away from that group and toward the substitutes.
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ElliotH Posted 9:32 pm
18 Sep 2009
Coca Cola and Pepsi objecting - shocking, isn't it. We need to begin to understand - and pay for - the real consequences of our actions. We can no longer pretend that "everything is just going to be OK". Denial is not a river in Egypt. Elliot H.
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djean Posted 6:31 am
19 Sep 2009
What has happened, though, is that when I do buy soda, I buy the cheaper store brand. Same with ice cream - I rarely buy it, but when I do, I don't buy the name brands with smaller boxes and bigger prices.
And I guess they figure I am too dumb to notice the difference between "3.5" and "3.15" pounds in bags of cat food.
I have noticed that Pepsi and Coke are resorting to deeper and deeper sales. When they jacked prices up due to "fuel costs", or started juggling the number of cans in a box to give the illusion of a sale price, even though to make soda is pitifully inexpensive, they lost customers, or at least sales volume. When gas got cheaper, they did not lower prices, and people like me are quite happy with store brands or else nothing.
I have never understood the quickness to raise prices - if people only have, say, $100 to spend on food, some food items are just going to be left out completely.
If I have to make do with less money, then business has to make do with less profit. The inability to accept that, coupled perhaps with the Wall Street dictum that profits must rise quarterly, is running things right into the ground.
JMO.
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arlani Posted 3:26 pm
19 Sep 2009
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cricket Posted 6:35 pm
19 Sep 2009
But no, we just keep producing obese people and failing to care for them.
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Albionwood Posted 4:59 pm
21 Sep 2009
Providing a taxpayer subsidy to produce corn, then taxing the resulting product, is the kind of foolishness that makes our government a laughingstock.
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thabby Posted 7:23 am
24 Sep 2009
I see a very symbolic side to this tax: sugary soda is the essence of the unhealthy food. Of course, it seems unfair to think of it as the only villain, but it's a start. Some people just become more aware of certain things when it hurts their pockets, so the tax could, hopefully, be a way to make Americans more aware of how much it cost to get and be obese.
The extra income is also welcome, and I really don't see it as being that bad, since you can always choose to buy the product or not, and soda was never, ever, a necessity.
In a perfect world, all obese people, specially the ones who blame their condition on something or somebody else, could realize that being healthy is much cheaper. Maybe hey would spend the extra bucks on veggies.
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