Soon-to-be endangered species?Back in December, the governor of New York, David Paterson, announced a laundry list of some137-plus proposed new or increased taxes. The one that likely received the most publicity is an 18 percent tax on non-diet soft drinks.
"We are in the midst of a new public health epidemic: childhood obesity," Paterson said.
"We are in the midst of a new public health epidemic: childhood obesity," Paterson said.
The $404 million the tax would raise would be used to fund public health programs, including programs aimed at preventing or reducing the incidence of obesity.
Paterson also expects such a tax to reduce the sales of sugar-laden beverages by about 5 percent.
The statistics he cites in making his proposal are alarming: One in four children under the age of 18 is obese, and in economically challenged areas, that number may rise to one in three. Only 17 years ago, the obesity rate in New York was about 10 percent -- that's a pretty remarkable jump.
Sure, soda is not of and by itself the cause or even necessarily a cause of obesity, it is a driver of childhood obesity. Furthermore, a recent study by Harvard University researchers (quoted by Paterson in his inital proposal) found that "each additional 12-ounce soft drink consumed per day increases the risk of a child becoming obese by 60 percent. For adults, the association is similar."
But of course New York is certainly not alone in all this bad fat news. A full 30 states can now boast of an obesity rate of 25 percent or higher, and three states -- Mississippi, West Virginia and Alabama -- have obesity rates that weigh in at more than 30 percent.
Ohio, incidentally, places 17th on the 2008 list, an improvent over 2007's 15th place ranking. Colorado, Hawaii and Connecticut are the slimmest states but all still weigh in with obesity rates around 20 percent.
Despite all the studies and statistics, Paterson has been hard pressed to find much support for the so-called fat tax on soda. Quinnipiac University released survey results just a few days ago that indicate 64 percent of registered New Yorkers (1,664 were surveyed) are against the tax, and the plan has been drawing criticism from everywhere from "The Weekly Standard" to the "Daily News" to countless blogs.
But one major source of support comes from Dr. Richard Daines, the state health commissioner for the state of New York. He is widely considered to be the architect of this particular proposal. So passionate is Dr. Daines about the soda issue that he made a YouTube video in support of it.
Yeah, so the video is little dry, but does it make any impact at all?
Here's where I stand on the matter:
I am, at heart, a good little New Yorker. I like a lot of the laws New York has on the books that would cause a great many Ohioans to clasp at their chests while screaming about the infringement upon their right to make (asinine) decisions (i.e. lack of a motorcycle helmet law).
I like that in NY you must wear a helmet while bicycling (and motorcycling). I LOVED living in NY when NY was one of the first states to institute a public smoking ban, and so obviously I strongly approve of the very high cigarette taxes the state has imposed. And I don't disapprove of the transfat ban in NYC. This little bit of legislation, in fact, has changed the way many chain and fast food restaurants operate nationally.
So is obesity the new smoking?
The evidence concerning smoking bans and taxes in undeniable. According to the CDC, smoking rates have dropped from more than 40 percent of the over-18 population in 1965 to approximately 20 percent in 2005, and much of the drop in smoking rates is attributed to increased taxation that began in the late '70s.
So yeah, a fat-tax on soda would okay by me. If it had even a fraction of the impact on obesity that cigarette taxes have had on smoking, I say, "You go for it, Gov. Paterson, New Yorkers will come around." Any maybe, eventually, the rest of the country also.
FYI, Paterson has also proposed taxes (or increased taxes) on downloaded music, movie tickets, beer, wine and cable/satellite television services. I have to admit I would not stop partaking of any of those because of increased taxes.
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This is a very bad idea and, if it goes through, another reason for New Yorkers to continue their exodus from the state. I, for one, am sure as hell ready to get out. Any new tax is a bad tax, particularly in this state where we are taxed to death (highest tax rate in the nation when all taxes are taken into consideration). And if you think the revenue from the tax will go to what it's supposedly earmarked for, it's highly unlikely. Just as lotto revenue is supposed to be earmarked for education, technically it isn't. It goes into the general fund and only a percentage is actually used for education...the rest goes to other programs.
ReplyDeleteIt's also another attack on personal freedom. I have to laugh at those who say we actually have freedom in this country. The truth is, we really don't. Seat belt and helmet laws and other laws that are designed to protect us from our own selves are simply bad laws. And those laws have started a trend that will only continue to get worse. Already there have been proposals to required helmets while sleigh riding or skiing. Already there is a law on the books that children under 14 have to wear a helmet while riding a horse.
Next it was the hands free cell phone law. What's next? No eating or drinking in your car? No changing the radio station? No talking to other people in your car when driving? Why not, right? Those are all potential distractions while driving.
Alcohol taxes, cigarette taxes, now fat taxes. We can't live when we're dead. It's getting to the point where we can't live while we're alive either. And if we choose too, it costs us dearly.
I mean if we choose to. God, I hate it when I make a spelling error.
ReplyDeletei disagree with the fat tax
ReplyDeleteeducate children on nutrition...make home ec a mandatory class and make healthy eating the core focus
you will not stop people from drinking soda with an 18% tax
where is this money going to go? really? really? if you could promise me that the money raised with this tax would all be used in funding education, then i may agree...but i know it wont and i dont like it.
enough with the taxation
where does it stop?
I honestly don't think the tax will have a substantial effect on the sales of pop. While some may switch to diet, an 18 percent increase is only about a 25 cent increase in total price on a two liter. I think people will pay for it: they are too addicted to their sugar and caffeine not to.
ReplyDeleteI personally drink the store brand pop, and more people might start taking that route as well because those quarters will add up. I think the tax would have to be much higher to have a significant impact.
An similar example would be cigarette prices in Ohio. Every few years the prices skyrocket due to additional taxes, but people keep on buying them.
http://stuffqueerpeopleneedtoknow.wordpress.com/
We don't have freedom in this country? Get some perspective!
ReplyDeleteOn the tax, I say it can't hurt to give it a try. The funding towards improved nutrition education or putting more PE back in schools would be a plus. If it doesn't help, it's easy to change. Plus, the whole point of having "state's rights" is for different states to try things.
I have plenty of perspective. And we really DON'T have freedom anymore. Not like we should. I'm not free to go out and pay for sex if I want. That's a crime. However, I can have sex with whomever I want for free (as long as it's consensual) and that's perfectly fine. I'm not free to ride down the street without fastening my seat belt. I'm not free to smoke in certain areas. I'm not free to ride a motorcycle without a helmet. I can't legally make a bet on a football game unless I'm in a couple of specific places. But I can spend all I want on a state sanctioned lotto ticket where my odds of cashing in are WAY WAY WAY lower than they are on a sports bet. And on and on and on. All these laws that restrict personal freedom are antithetical to the whole purpose of this democratic experiment we call the United States. It's one thing to have laws that protect people from harm inflicted by others...it's idiotic to have laws that protect us from our own selves.
ReplyDeleteYou say it's easy to change if it doesn't work. Really? YOU need some perspective...because once government implements something, it's hard as hell to change. They wouldn't even lower the gas tax when prices were so high. They talk a good game and are able to convince people that what they're doing is for the greater good, but it rarely, if ever is. Any new taxes in this economy will only serve to hurt people more than they're already hurting.
The "fat" tax is a type of "excise" tax. An excise tax is a selective sales tax (e.g., gasoline tax, cigarette tax, tax on alcoholic beverages, etc.)
ReplyDeleteIn evaluating a tax, the standard criteria include: economic efficiency, revenue yield and elasticity, equity (fairness), administrative costs, and compliance costs or burden. I will briefly discuss the theoretical impact of the proposed tax according to each of these criteria.
ECONOMIC EFFICIENCY
This has to do with the extent to which and how a proposed tax interferes with consumer's choices. In other words, do people change their consumption behavior because of the tax? The answer to this depends on our assumptions of how elastic the demand is for the taxed good. If there are no other substitutes for sugared soft drinks, then the tax will have less effect than if people switch to drinking, say, Cool Aid, Gator Aid, or other sweet drinks. But, as long as people can purchase a good that is a reasonable substitute, they will (all other things being equal) consume less of the taxed good.
A related question is, "who pays the tax" -- the producer or the consumer? This is called the incidence of the tax. It's about who is burdened more by the tax, regardless of where the tax is actually imposed. That is, if the government tells retailers that they must collect this tax, they may or may not be able to shift all or some of this burden to the consumer. If there are other substitute goods, then the producer will have to absorb more of this new cost. If, on the other hand, consumers will accept no substitute to sugared soft drinks, then the retailer can more readily pass the cost on to the consumer.
REVENUE YIELD AND ELASTICITY
The yield of the tax is the product of the base (number of units of taxable product purchased) times the rate (18 percent). So, to estimate the yield of the tax, one would have to estimate how much sugared soft drink will be purchased and multiply that by 18 percent (minus any costs of administering the tax). If one assumes that people will consume less sugared soft drinks, then the yield will be lessened accordingly. The elasticity of a tax is about how much the yield will vary as the base changes. By having an 18 percent tax rate, the state will realize more revenue if the price of sugared soft drinks goes up over time (say, due to increased demand) than if it had opted to impose a tax of, say, 18 cents per can or bottle. Likewise, if the demand for sugared soft drinks goes down over time, then New York State will correspondingly expect to lose revenues if they are receiving revenues at a rate of 18 per cent. In that scenario, the state would have been better off revenue-wise to have had an in variable tax per unit of good rather than one that is a percentage of the sale.
EQUITY
Analysts would look equity from different perspectives. (1) Using the "benefit principle" , those who benefit should pay. Thus, if you assume that the revenue goes to pay for the treatment of diabetes and other diseases caused by obesity, then the recipients of those benefits are helping to pay the health care costs. (2) Using the ability-to-pay principle, one would want to know whether, relative to their incomes, are people who are less well off paying relatively more of their income (ability to pay) on the tax. This is an empirical question. It might be that wealthier individuals can afford to pay for sugared soft drinks more, so they are paying more of the tax relative to their incomes. Or, it might be that the poor are buying more of these sugared soft drinks and are spending a higher proportion of their income on the tax than are wealthier individuals.
ADMINISTRATIVE COSTS
I would expect the administrative costs of this proposed tax to be minimal. Retailers are already charging sales taxes on cigarettes, alcohol, gasoline, and other products. So, it is just a matter of enforcing the law. There could be an added administrative cost if it turns out that there is "bootleg" sugared soft drink being smuggled in from surrounding states, requiring stepped-up monitoring and enforcement at New York's borders. Prosecuting retailers and consumers who evade the tax would also be administrative costs on the government of imposing the tax.
COMPLIANCE COSTS
Taxes vary in terms of the cost on the taxpayer of complying with the tax. (Think of the time and money taxpayers spend to do their income taxes correctly, because the system is so complicated.) I would expect the compliance costs of imposing this tax to be minimal, because it just means shelling out more money at the check out counter or in a vending machine.
In sum, using an alternatives-and-consequences approach (as opposed to pro-and-con, which depends on the perspective of the analyst), one can analyze the expected effects of the proposed tax objectively. Analysts may disagree because they make different assumptions or because they focus on different variables. Policy analysis is of two basic types: positive and normative. Positive analysis has to do with objective analysis (what IS). Normative analysis has to do with subjective analysis (what OUGHT to be or what SHOULD be). The latter involves judgments about values and preferences and goes beyond simply determining the effects of the tax.
Finally, if the objective is to lessen sugared soft drink consumption, policy makers should consider a variety of alternatives. These could include an outright ban on the sale of sugared soft drinks (and we all know how well Prohibition worked), educational programs to try to get people to change their behavior, subsidizing alternative goods that are deemed to be more healthful. And, if the goal is broader (e.g., decreasing obesity), the forms of governmental intervention could include things like building more pedestrian-friendly areas, building more bike lanes, adding more physical education, requiring employers to provide recreational facilities, and on and on.
I don't agree with tax on soda. Sounds like someone should throw a Boston Tea Party. But they need to do that with the soft drink just to get rid of it ALL anyways.
ReplyDeleteMy sisters in alternative health doctor so as much Poison that's in the food and drink we have, I can't support a tax on it.
BTW, their new sugar substitute is supposed to be worse than the aspartame.
People should be free to choose to eat whatever they like. And if their choices create additional burdens for the public to cover healthcare costs, then the public should be able to raise the money necessary to treat those who made poor choices or help them to make better choices. It's simple economics.
ReplyDelete