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March 04, 2022

Would a soda tax succeed where the fat tax couldn't?

Last October, as the issue was gaining increasing steam, we discussed the fat tax – was it a good idea, a bad idea or something close to the plot line from V for Vendetta?

Indeed, the conversation quickly turned to “enough government already” almost without pause. And, perhaps, rightfully so. Such a proposal is radical, even considering the health information we have today.

Yet, still, hidden amongst the anti-totalitarianism comments was a good amount of support for the idea. Maybe the fat tax wasn’t perfect, but its ideals seemed to have the right intentions. Maybe it just needed a little … tweak.

Well, here’s a new wrinkle for everyone to mull over. The state of New York has suggested an idea that can only be classified as the younger cousin of the fat tax: the soda tax.

The soda tax, based on its proposal, would aim to implement a duty on pop and other sugary drinks that contain more than 10 calories per eight ounces. This would include most every non-diet soda, as well as sports drinks, energy drinks, sweetened coffees and teas and juices with less than 70% natural content (milk, its offshoot products, and baby formulas would be exempt, however.)

A set-in-stone levy isn’t quite mentioned, but the Alliance for a Healthier New York charges that a 10% increase in a beverage’s retail cost would lead to a decrease in consumption by about 15%, especially among children.

Of those kids, the group says, each minor’s likelihood of childhood obesity would decrease by 60%, presuming they drink one can of pop each day.

Impressive stats? Sure. Tough to argue with, too. But will they hold up against what’s at stake?

Opponents of the soda tax point that only low-income groups would be affected by the tax and, according to the Consumerist, it “does nothing to reverse the tide on the real problem.”

And that, of course, sets off a retort from those who favour the tax, arguing that additional revenue generated by the price increase could “be used for health care and health related initiatives.”

You’d think that argument would only be bolstered, too, if such a tax were proposed in Canada, a country that largely absorbs the medical costs of its inhabitants.

But if the soda tax can’t pass in the private health care world of the U.S., an initiative like this probably has no chance north of the border. And judging by the 72% of respondents in a recent poll that think a tariff on sugary drinks is just another government cash grab, the movement’s still got a long way to go before it ever reaches fruition.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...