Are soda taxes the answer to the fiscal cliff?

One activist group says yes, though it won't do much to curb obesity.

By Jonathan Berr Dec 3, 2012 12:37PM
Image: Taxes ( Peter Gridley/Photographer)One group has an answer for lawmakers trying to avoid the fiscal cliff: Tax sodas.

Give the Center for Science and the Public Interest credit for being creative. The group, which has long advocated levying taxes on sugary sodas as a means of reducing the nation's soaring obesity rates, argued in a press release Friday that it could help solve the nation's fiscal woes. The group also wants to raise taxes on alcoholic beverages.

"A penny-per-ounce tax on soda and other sugar-based beverages would raise $160 billion over 10 years even as it would make a modest dent in consumption," according to CSPI. "Even smaller soda taxes of just a penny per can could raise $10 billion over 10 years."

The economic argument that CSPI raises certainly is compelling during these trying fiscal times, as investors fret about the imposition of draconian tax hikes and government spending cuts being imposed if Congress fails to take action before the end of the year. The proposal, though, raises more questions than it answers, and doesn't stand a chance of passing Congress given the political clout of the beverage industry.

First, the case that soda is a threat to public health that some, such as New York Mayor Mike Bloomberg, make is far from iron-clad. Per-capita soda consumption has been on the decline for years. CSPI itself cheered this trend in a 2010 press release. The non-profit also has a restrictive definition of "sugary beverage" to include ice tea and fruit-flavored drinks with little or no juice, according to spokesman Jeff Cronin. Pure fruit juices, which are full of sugar, would not qualify, he told me in an email.
"Unlike orange juice, say, which does have nutrients, soda and juiceless fruit-flavored drinks have no redeeming nutritional qualities," he writes in an email.

While that's true, fruit juice has its problems. The American Academy of Pediatrics discourages parents from giving these beverages to babies under 6 months of age unless it is needed to alleviate constipation. There are plenty of other loopholes too. Diet soda may lack calories, but its consumption has been linked to increased risk of stroke. Why should Starbucks get a free pass given the caloric heft of some of its beverages?  A 16-ounce Starbucks Pumpkin Spice Latte packs a whopping 380 calories, 120 of which come from fat. A 12-ounce can of Classic Coke seems healthy by comparison because it has 140 calories, none of which come from fat.

Making it more expensive for people to get their caloric fixes won't make them thinner, but it will make them poorer. People, including this writer, become overweight and stay that way for many reasons, ranging from the genetic to the sociological. Declaring "war" on some foods and not others is bad science and even worse public policy.

--Jonathan Berr does not shares of the listed stocks.

More from Money Now

Dec 4, 2012 9:28PM
How about a $5.00  tax on an oz of pot
Dec 4, 2012 9:06PM
The corn syrup in soda is subsidized by the government, so why not make soda reflect its actual cost by taxing it?  (Heck, why don't they do that with everything that contains corn syrup and HFCS?  It might get people to buy produce again!)
Dec 4, 2012 2:28PM

Just tell the da in washington.. to pass the FAIR TAX ACT..  that way  EVERY ONE  would pay their fair share.. that includes the rich, government officials, and even the illegal's in this country...


It would do away with the IRS.. that should free up some money right there..


we all are working about 128 days a year, just to pay for all the taxes that we do pay.. and know that does not include the tax if you do not have health insurance..  just so u know..


Just my humble thoughts on the matter...

Dec 4, 2012 12:16PM

Never gonna happen! The obese in this country, far outweigh the congress. We are already taxed through the nose on everything as it is. Cut spending, thats the one answer. Our tax rates may be low, but we are taxed on everything else. Payroll taxes, income taxed, excise taxes, cigarette taxes, booze taxes, everything you buy, TAXES!!!!


Enough with the taxes, stop spending money you don't have. Hear that congress? STOP SPENDING!!!

5 cents Tax on one oz. of Marijuana would generate More!
Dec 3, 2012 5:53PM

Is there anyone left who remembers what the BOSTON TEA PARTY was all about?  Taxes on a popular beverage implemented by a tyranical government.  The concept of using taxes as a tool to control social behavior should OUTRAGE every true freedom loving American.

Yet people buy into it for the stupid reason that it will help lower the deficit.  Shurley there isn't anybody that stupid.  Oh wait........obama was re-elected by those same people.

Dec 3, 2012 5:04PM
Jeffery, if you are dumping over 200 grams of sugar into your system every time you ride, you might not be happy with the risk pool you end up in. You might want to switch to water.
Dec 3, 2012 2:35PM
I'm an endurance athlete, most of the soda I drink is to refill my bike's three 24 oz water bottles after I've been riding ~120 minutes @ > 20 mph.
Maybe I'm just abnormal, but to me fluid has nutritional value, I can't run without it.
I agree that products should be taxed to reflect their true cost to society. If the revenues of this tax were targeted to health care I would approve.
But what I'd rather see is me being able to put myself in an insurance risk pool with other people that take as good care of their bodies as I do.

Dec 3, 2012 1:31PM

Higher taxes on cigarettes were just the beginning, but those that voted for them were too stupid to see that. You have now opened the door to all out attacks on anything and everything they can make an extra tax dollar on.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] Equity indices remain near their flat lines as heavily-weighted sectors continue trading in mixed fashion.

At this juncture, the industrial sector (-0.6%) is the weakest performer among cyclical groups with defense contractors pressuring the space. The PHLX Defense Index is lower by 1.1% with just about every component trading lower. Including today's decline, the Defense Index is now down 2.4% for the week and off 0.7% so far in September. On the upside, General ... More