Tax Analysts Blog

A Coke and a Smile and a Tax

Posted on Jun 11, 2014

I'm compiling a list of people who propose terrible tax policy. Today's winner is Illinois Rep. Robyn Gabel (D), the sponsor -- and from what I understand, the mastermind -- of the proposal (HB 397) to adopt a soda tax to fight obesity in her state. The idea was to impose an excise tax of one cent per ounce on all sweetened beverages. The tax would not apply to artificially sweetened beverages. Apparently, folks in Illinois drink a lot of sweetened beverages because in addition to "doing good," the tax would raise $600 million a year!

HB 397 failed to get out of committee. But it illustrates that some people think the government is the answer to all problems. Obesity is a problem, but for some, it's a genetic problem having nothing to do with how many Dr Peppers they drink. Of course, taxing soda would decrease consumption. Or it might lead people to buy their Pepsi in Indiana. But blaming obesity on soda is silly. Why not blame Oreos? Quarter Pounders? Sitting in front of video games all day? Why not blame people who refuse to take personal responsibility for their health?

Gabel's proposal illustrates terrible tax policy (not that do-gooders care that much). It would have made the system more regressive. Like most liberals, Gabel is indifferent to imposing regressive taxes when it furthers an agenda. Some people would tax everything they find offensive.

But more importantly, the tax wouldn't work. It would tax a can of Coke, but if you went to Starbucks and dumped five teaspoons of sugar into your latte, there would be no additional tax. It's silly. There are many non-obese folks who drink Coke. Imposing a tax on them to pay for other externalities is neither fair nor effective. Soda taxes, like many ideas, are driven by the idea that politicians must do "something." I just wish they wouldn't impose their somethings on the rest of us.

This post is an excerpt of article that first appeared in State Tax Notes magazine.

Read Comments (2)

emsig beobachterJun 11, 2014

Very insightful. This is one reason that most politicians do not qualify for
the title of sharpest pencil in the pencil case. Would it not be more efficient
to impose a tax on refined sugars at the wholesale level -- as is done with
alcoholic beverages and tobacco products?

I don't know if such a tax will stem the tide of rising obesity rates and
diabetes. Perhaps the revenues raised from the sugars tax could be used to
subsidize memberships in fitness centers.

edmund dantesJun 12, 2014

Good points, all.

I'm suspicious of that $600 million revenue figure, even aside from the likely
response that everyone will start buying soda out of state, or switch to
untaxed juices or gatorade. To get to $600 million, every single one of
Illinois' 12 million citizens, adults and children alike, would have to drink
400 cans of 12 ounce sodas every year, more than one every day. No one I know
does that, but perhaps I don't the right people.

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