By Ryan Ekvall | Wisconsin Reporter
MADISON, Wis. — Plus-size taxes on soda do not trim waistlines, but they do fatten the pockets of taxing authorities.
“People drink less soda when prices increase (due to taxes),” said Jason Fletcher, health economist at the LaFollette School of Public Affairs at the University of Wisconsin–Madison. “But when people drink less soda, they tend to drink other high calorie beverages.”
Fletcher has co-authored a study with David E. Frisvold, a University of Iowa economic professor, and Nathan Tefft, professor at the University of Washington’s School of Public Health, concluding the tyranny of consumer demand foils government health policy.
When the price of Coke rises, people opt for sweet tea, sports drinks or other high-calorie drinks. The effect of taxation is negligible.
“Certainly until recently (proposals to tax soda) was mostly about revenue. It’s only been in the last few years where policy proposals are couched in health benefits,” Fletcher said.
Sin taxes have become nearly as addictive for governments as the products taxed, an earlier study by economists at the Mercatus Center at George Mason University found.
“The temptation for states to use selective excise taxation is politically irresistible since the revenues generated in such ways can be reallocated to the public treasury, while some taxpayers, who are portrayed as imposing costs on society at large, are penalized,” the study states.
But supporters of Big Gulp bans and soda taxes aren’t likely to let facts get in the way of progressive progress. San Francisco lawmakers have proposed a new tax on soda that’s expected to bring in $30 million a year to city coffers.
“We have a history of supporting these kinds of public health measures,” San Francisco Supervisor Scott Wiener told Time Magazine. “Policy trends often start in San Francisco and then spread elsewhere. We’re proud of that as a city.”
Researchers might want to next look at the correlation between unfunded public pension liabilities and newly proposed soda taxes. Legislatures in Illinois, California and New York, where public pensions are in crises, have this year proposed new taxes on “sugar-sweetened beverages,” according to Politico.
Contact Ryan Ekvall at email@example.com, 608-257-1382 or follow him on Twitter @Nockian.