Is two cents a lot of money? It is when you are talking about a soda tax, an economics professor in Vermont has found.
Vermont is among a handful of states considering a two-cents-per-ounce tax on soda to fight obesity. Not only does a tax at that rate raise the price of your beverages by as much as 153 percent in some cases, says Art Woolf, associate professor of economics at the University of Vermont - it also makes little sense as a way to reduce obesity.
“Although two cents doesn’t sound like much, any tax has to be considered in context,” he writes in an opinion piece on VTDigger.org.
What’s that context?
Woolf finds that, “a two cents per ounce tax translates into about a 20 percent tax on a single 20 ounce bottle of soda purchased at a convenience store or from a vending machine.” Which means that a 20 ounce bottle of soda that currently costs $1.89 would now cost $2.29 or a two liter bottle could go from 88 cents to $2.23.
Until now legislators have been ignoring the impact such drastic changes could have. The reality is that these dramatic increases will disproportionally affect lower income residents of Vermont and ultimately force them to cross state lines to purchase these products. And at what cost? Supporters claim that the revenue from the tax will go towards helping reduce obesity rates, but taxes, especially those that single out one product, won’t make people healthy.
Woolf says, “If the Legislature wants to reduce obesity, a narrow tax on sugary drinks may not be the best way to accomplish that goal. After all, if consuming too much sugar is a major cause of obesity, why not tax all sugary products: cookies, candy, brownies, cake mix, ice cream, chocolate milk, sugar itself, and any product with a lot of calories from sugar?”
Exactly. Taxing one product does not make sense if legislators are truly looking for a solution to obesity. In reality they are hoping the tax can help increase revenue and in order to gain support to pass the tax, they are downplaying the enormous price increases that could occur as a result.
We aren’t fooled by these tactics, and you shouldn’t be either. Disguising a tax that is designed to help increase revenue as one that will help make people in Vermont healthy is a step back in solving obesity. Allowing the government to impose a tax that could double the price of products people know and love and that have repeatedly been deemed safe is ineffective.
Change comes from providing people with the information they need to choose what options are right for them, not with government regulations. To learn more about the ineffectiveness of soda taxes check out YourCartYourChoice.com.