What’s Wrong with Taxing Soft Drinks?

Oregonians voted down a new tax on tobacco in 2007, realizing that it would unfairly hurt the poor. So why would one state legislator now propose a tax on sugar-sweetened soft drinks?

Representative Mitch Greenlick seems to think that making soft drinks more expensive will cut down on childhood obesity, even though some studies come to different conclusions. He knows that a number of other states tax the stuff, so why not get some revenue for the thirsty state coffers and help kids at the same time?

Well, it turns out that there are plenty of reasons to resist the urge to do good through such a tax scheme. The first is the moral argument against government meddling in our lives and life choices this way in the first place.

Then there’s the case that the tax would hurt all consumers, especially the poor. New York abandoned such a proposal in 2009 after what the governor referred to as the “sugary beverage tax” came to be called “the fat tax.” Even the director of government relations for the Food Bank of New York City testified against it. And some low-income advocacy groups argued that the tax would financially burden poor New Yorkers while doing nothing to improve their access to exercise or fresh, affordable, healthy food.

Finally, Rep. Greenlick wants some of the revenue from the tax to go toward fighting obesity, but the track record of so-called “sin taxes” actually getting to such programs is poor. They often end up being diverted to other purposes; note that tobacco tax revenue, and even revenue from settlements with tobacco companies, often end up somewhere other than in smoking cessation programs. Why taxing soft drinks will fare better is a hard case to make.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.