Soda Tax Bubbles Up

Empty calories.

Photographer: Daniel Acker/Bloomberg

Is it smart to impose a sin tax on soda? Many Americans hate the idea, considering it an imposition on personal freedom. Congress, likewise, won't go near it anytime soon. But it's been recommended -- for good reason -- by the panel of doctors and public-health experts who help define U.S. dietary standards. And it deserves a try -- ideally by city and state governments.

Americans have a serious sugar problem, as the Dietary Guidelines Advisory Committee reported last week. A sugar-rich diet is a major cause of obesity, which can lead to diabetes, heart disease and plenty of other deadly and debilitating ailments. So to suggest that people should consume less sugar is hardly controversial.

To go a step further and recommend using tax policy to persuade people to comply may be novel, but it's based on a sound and well-established economic principle: Tax the bad stuff. Levying taxes on alcohol, tobacco and gambling -- all of which impose heavy costs on society -- has led to reduced consumption and helped finance the government programs that address the problems they cause. 

Taxing sugary drinks, which are a leading cause of obesity but have no nutritional value, makes at least as much sense. Perhaps even more; after all, according to some studies, modest alcohol consumption may at least have some positive health benefits. No such evidence exists for sugary drinks.

Critics ask: Why not tax doughnuts and candy bars, too? But there is an important distinction between junk foods and junk drinks. Foods usually have a modicum of nutritional value and help fill the stomach, sending a signal to stop eating. Sugary drinks do nothing but supply empty calories.

One city is already experimenting with a soda tax. In November, voters in Berkeley, California, voted by a 3-to-1 margin to impose a penny-an-ounce tax on sugary drinks. (Michael R. Bloomberg, founder of Bloomberg L.P., supported the referendum.) A legislator in Connecticut recently proposed a similar levy. It’s too soon to know what the effect of Berkeley’s tax will be, but early indications from Mexico -- which adopted a sugary-drink tax in 2013 -- are encouraging. People there say they are drinking less soda, and they're better aware of the link between sugary drinks and diabetes and obesity.

While the economic case for a soda tax is sound, the political argument will take more time to develop. The soda industry, like the tobacco industry before it, still denies being part of the problem.

As obesity-related problems worsen and public health expenses multiply, states and cities will need a range of new strategies. Providing greater subsidies for fruits and vegetables -- an idea that the federal advisory committee also endorsed -- could improve diets. But to fight one of obesity's leading causes head on, the best weapon may be a tax. 

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.