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Taxing Your Soda and Pop

What are your thoughts about a federal tax on sugary drinks (ie. Soda, energy, and sports drinks)?

The Field Poll, a non-partisan media-sponsored public opinion news service, found an interesting result in their survey of Californians’ views on the tax on sugary drinks. Approximately 40 percent of California residents voted in support of a soda tax when first asked; the statistics increased to a drastic 68 percent when suggesting that the revenues made from taxes were going to be used to improve school nutrition standards and physical activity programs. Also, the survey finds that three in four California voter participants (75%) understand that those who consume sugary drinks regularly increase their chances of obesity and weight-gain problems.

According to the Dietary Guidelines for Americans (2010), 35.7% of added sugars in Americans’ diets come from sugary drinks such as soda, energy drinks, and sports drinks.

Awareness of the impact of high-sugar soft drinks is an issue Americans often neglect. Robert Wood Johnson Foundation finds that the in-takes of sugary drinks among children and adolescents have dramatically increased over the past 30 years. Obesity rates for children ages 6 to 11 have significantly increased from 4.2 percent to an alarming 17 percent and 4.6 percent to 17.6 percent for adolescents ages 12 to 19 years old. Not only does the study show that there are strong correlations between sugary drinks and weight gains, but also that sugary drinks often lead to excess caloric intakes that increase obesity rates.

Those who are most vulnerable to obesity related health problems are the low-income individuals. According to the NCHS data brief, people with a lower income consume more sugary drinks compared to their overall diet in contrast to individuals with higher income. The study finds adults with an income below the 130% of the poverty line consume a total of 8.8% total kilocalories from sugary drinks, which is higher than the 6.2% of those who are living at or above 350% of the poverty line.

Earlier this week, National Coalition on Health Care and Center for Science in the Public Interest evaluated the impact sugary drinks have on the nation’s rising health care costs and proposed a tax on sugary drinks. At the event, it was clear that the panelists share the idea of establishing a tax on high-sugar drinks. The new tax could potentially help Congress better finance health care reform and to slow the growth of health care spending and costs. It can also help better improve Americans’ health and struggle with obesity.

Taxing sugary drinks 1 cent per ounce – 12 cents per can, could potentially raise 150 billion per year said Dr. Michael Jacobson, an executive director for the Center for Science in the Public Interest. Dr. Jacobson states that 53% of the general public supports the tax proposal if that revenue is to be used for better health preventative purposes. In District of Columbia, 71% of the residents support the idea if it was to support healthier meal options in their school systems.

Chuck Marr, Director of Federal Tax Policy at the Center on Budget and Policy Priorities, states, “…taxes send a signal.” In order to design a tax on sugary drinks and to have a successful outcome, there needs to be a sizable tax.

The Center on Budget and Policy Priorities suggests an excise tax on sugary drinks at the wholesale level would be ideal and preferable. CBPP presents two types of taxes, which could be implemented at a federal level: ad valorem tax or an excise tax.

The idea of taxing sugary drinks is to promote better health for the American people. Therefore, establishing an excise tax could be more effective than issuing an ad valorem tax. With an excise tax, the customers will see the price increase before their purchase. However, with an al valorem tax, the customer will see the price increase after they have made their purchase, which is counter-intuitive in promoting a healthier lifestyle.

Implementing a tax on sugary drinks to promote healthier lifestyles and to reduce health care costs is an interesting idea. There is data that shows correlation between sugary drinks and health problems however; the role of government is to guide the American people in the right direction and not to make the decision for them. It is important to advocate for better health choices in order to minimize unnecessary health care spending, but it is perplexing to punish the remaining Americans with a tax on sugary drinks.

I’m not completely convinced that imposing taxes on sugary drinks will in fact lower health care spending and improve obesity problems, but it is important for policymakers to weigh the options when proposing an idea such as this.

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