Obesity has become a hot issue and widespread epidemic in the United States and other countries. Although many people are obese because of genetics, there are many who are overweight because of their diet. Soda is a major contributor to obesity, especially in children where there is sometimes no moderation. In an attempt to curtail this situation, New York Mayor Michael Bloomberg, proposed outlawing sodas larger than 16 fluid oz. However, this has been met with serious opposition from the American Beverage Association, which has spent $9.4 million in only the first four months of 2010 on lobbying. As a counter offer, many have suggested taxing soda.
The idea of taxing soda and other carbonated beverages is not new. In 2009, New York State proposed an 18% tax on sugary drinks, which was later abandoned. Currently, Maryland taxes sugary drinks at 6% while Virginia’s rate is 1.5%. These are two out of 33 states currently taxing sodas. Despite the difference, all 33 states are taxing sodas in moderation which produces moderate results for their individual economies. To put this in perspective, cigarettes are taxed at an average rate of 58%.
According to scholars, currently imposed beverage taxes are far too small to have a significant effect on consumption. However, Kelly Brownell, the director of Yale’s Rudd Center on Obesity, has suggested increasing the tax to 15-20%. Brownell claims this increase could lead to an 8% decrease in soda consumption. The problem with this proposal is its likelihood of passing through state governments. Maine suggested a 20% tax on soda which was immediately turned away and New York’s governor, David Patterson, proposed an 18% tax which fell through in the state legislature.
From an economic standpoint, the U.S. Department of Health and Human Services reports that the tax could generate $14.9 billion in the first year alone. While the Congressional Budget Office estimates that a 3-cent-per-ounce-tax would generate $24 billion over four years.
The idea of a Soda Tax has also gained traction across the Atlantic, specifically in France where obesity is becoming a much larger issue. Their new tax will add 1p to the cost of each drink such as Coca-cola or Fanta, but zero-calorie drinks will be exempt from the new tax. This new tax comes shortly after the French government announced it would also be rationing ketchup, mayonnaise and salt in their school canteens.
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