Friday, September 18, 2009

A New Twist On Soda Taxes

Instead of taxing the consumer who purchases carbonated beverages - soda - San Francisco nanny state mayor Gavin Newsom wants to slap another tax on the businesses who sell soda. And it's an end run around existing legal procedures to impose taxes.
Newsom would need voter approval to tax individual cans of soda and sugary juice, but only needs approval from the Board of Supervisors to levy a fee on retailers. His legislation would charge grocery stores like Safeway and big-box stores, but would not affect restaurants that serve sodas.

Newsom wouldn't say how much the stores would have to pay or how the city would spend the fees. When he first floated the idea in 2007, he said the money would go to his Shape Up San Francisco exercise program and for media campaigns to discourage soda drinking.

The mayor said the city attorney's office has warned him the city would probably be sued over the matter, but he said it is worth the risk to try to curb a leading cause of obesity and diabetes.

"We know we'll be sued," he said. "But I really believe this is important to do."
So, the City's attorney said that the program would probably result in lawsuits and yet Newsom thinks that this is a good way to curb a leading cause of obesity? Nothing is going to get in his way of imposing new taxes, not even a little matter of legality.

I'm sure that will go over real well with businesses that are reeling from the recession.

Moreover, it's curious that he's only going to tax retailers like supermarkets and exempt restaurants. People drink plenty of soda in restaurants. In fact, many offer free refills. I suspect the real reason for that curious distinction is that there are far more restaurants than there are supermarkets so he's going after the business sector with less numbers. It's a purely political distinction - hoping to get approval for the tax without upsetting a wider business community. It also undermines the argument that this is about reducing obesity. This is about exerting control and raising money, not about obesity.

Taxpayers in San Francisco should be up in arms over yet another tax grab, but this is San Francisco we're talking about. They're probably going to roll over and take it. Again.

The Herald News relates a Los Angeles Times report that suggests that while soda consumption has gone up in tandem with obesity rates, switching from soda to other non-sugar beverages has not resulted in a reduction in obesity. Part of the problem appears that consumers simply eat more, figuring that the caloric savings from diet soda allows them to eat more.
It certainly stands to reason that switching from Coke to Diet Coke — or better yet, to water — would cause people to lose weight. Surprisingly, this connection is difficult for researchers to make. In some studies, people who knew they were saving calories on soda wiped out that advantage by taking extra helpings of food. Perhaps others saw less need to exercise. For whatever reason, cutting back on sugar-sweetened beverages is just not as good for the waistline as one would expect.

And yet, advocates of a soda tax keep pressing their case — most recently in a Health Policy Report to be published in today’s edition of The New England Journal of Medicine. They insist that raising the price of sugary drinks by means of a tariff will prompt people to buy less, consume less and consequently gain less.

Many researchers have made the case that a soda tax would indeed eat into soda purchases. In multiple studies, they have found that a 10 percent tax on sugar-sweetened beverages would reduce consumption by 8 percent to 11 percent. But, as reported recently in the Los Angeles Times, researchers have almost universally failed to close the loop by showing that reduced consumption leads to lower body mass index.

In their policy report, the soda tax advocates cite four long-term, randomized, case-control trials — the kinds of studies considered the gold standard in medical research. But these trials fail to show that drinking fewer sugary drinks leads to widespread weight loss.
In other words, this tends to support the notion that this is all about taxes and raising revenues, and not about any potential health benefits.

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