Proposed Soda Tax a Bitter Pill for Taxpayer Advocates

Proposed Soda Tax a Bitter Pill for Taxpayer Advocates
August 1, 2009

John Nothdurft

John Nothdurft (jnothdurft@heartland.org) joined the staff of The Heartland Institute in May 2008... (read full bio)

Congress is considering imposing a federal tax on nondiet sodas and other sugary drinks to help pay for President Barack Obama’s new health care proposal, estimated to cost well in excess of $1 trillion.

The soda tax is expected to bring in about $24 billion over the next four years.

Opponents of the tax point out Obama already has broken his pledge not to raise taxes on families making less than $250,000, by signing a bill sharply raising the federal excise tax on tobacco products, including a 156 percent increase on cigarettes.

The soda tax—another so-called sin tax—would similarly increase the tax burden on low- and middle-income families.

‘Massive Tax on Groceries’

“If President Obama approves new taxes on beer, wine, and sodas, then he will be imposing a massive new tax on the groceries of millions of middle- and lower-income Americans,” said FreedomWorks spokesperson Adam Brandon.

Public health groups argue a tax on carbonated soft drinks and other sweetened drinks would promote better public health by discouraging people from using these legal products while bringing in revenue to fund new health programs.

“Soda is clearly one of the most harmful products in the food supply, and it’s something government should discourage the consumption of,” said Michael Jacobson, executive director of the Center for Science in the Public Interest, an advocacy group that supports a federal soda tax.

‘Eating More, Exercising Less’

Brandon dismisses these claims, saying, “For years, critics of soda have argued that it is a unique contributor to obesity. This flies in the face of both common sense and scientific research. The fact is that Americans are getting heavier because we’re eating more and exercising less. You can’t tackle our nation’s obesity problem by making scapegoats of soda, alcohol, or any one product.”

Brandon argues the real aim of these taxes is to find “new, untapped sources of government revenue.”

Blocked in New York

Recent proposals by state legislators to hike these excise taxes have caused considerable taxpayer blowback. In New York, a plan backed by the governor and health commissioner to impose an 18 percent state excise tax on sugary drinks so far has been rebuffed.

Opponents also warn sin taxes may not be as efficient or as effective in changing consumer behavior as advocates claim. A recent study by researchers at the Mercatus Center on the efficiency of excise taxes found, “taxes on sugar-sweetened soft drinks do not necessarily advance the overall public interest, may be regressive in nature, and hardly ever work as intended.” (See story on page 17.)

The study also notes, “the [health] effectiveness of these taxes appears to be trivial because soft drink consumption is a relatively small part of the diet for overweight people.”


John Nothdurft (jnothdurft@heartland.org) is a legislative specialist for budget and tax policy at The Heartland Institute.

John Nothdurft

John Nothdurft (jnothdurft@heartland.org) joined the staff of The Heartland Institute in May 2008... (read full bio)