Following the repeal of Cook County’s soda tax in 2017 — the deep and enduring unpopularity of Philadelphia’s soda tax and numerous studies showing their lack of effectiveness in reducing obesity — one could be forgiven for thinking this policy was as dead as Michael Bloomberg’s presidential ambitions.
But like almost all bad ideas regurgitated from the so-called “public health” community, it has come back with a vengeance thanks to an intervention from the American Academy of Pediatrics and the American Heart Association.
Invoking worrying rates of childhood obesity, the Academy of Pediatrics and American Heart Association are demanding soda price hikes, advertising bans, and subsidies to favored foods. The official dietary guidelines recommend that added sugars should make up less than 10% of all calories consumed. According to some studies, kids are getting around 17% of their total calories from added sugars with half of these coming from sugar-sweetened beverages, hence the call for higher taxes.
The problem from a health standpoint is that soda taxes don’t reduce obesity. In 2018, the New Zealand Institute for Economic Research published their review of 47 studies investigating the effectiveness of sugar taxes.
“Our conclusion is that the evidence base gets weaker further along the chain of intervention logic,” said the report. “If taxes did not have economic costs, through deadweight losses and implementation costs, then even a slight causal link between a tax and an improvement in health outcomes might be justified. That, however, is not the case.”
In 2014, the management consultancy McKinsey released an analysis of 44 interventions governments could undertake to reduce obesity, with soda taxes found to be one of the least effective.
Undeterred, soda tax supporters soldier on, insisting two countries show their preferred policy to be a stunning success. Mexico, which implemented a one peso per liter soda tax in 2014, is said to have slashed consumption by 6% in the first year. The problem? It isn’t true.
Soda consumption in Mexico rose slightly in the tax’s first year. What the study trumpeting the policy’s success actually said was that consumption would have been 6% higher had the tax not been introduced. That’s not an unreasonable assumption, but it can’t be counted as real terms decline as the soda tax advocates promised. The number of obese Mexicans also rose during that period. Between 2012 and 2016 the number of Mexicans classified as obese rose by 4 million.
Chile is another alleged success story. But the very paper quoted by the Academy of Pediatrics and American Heart Association states “it is hard to detect a clear overall time trend based on pure visual inspection alone. While the peaks in the data certainly become less pronounced over time, so have some of the troughs. It is equally difficult to discern an obvious pre- versus post-tax pattern in any of the categories.” In other words, there is no detectable decline in real soda consumption.
Closer to home, Berkeley’s soda tax is touted as having cut sales 9.6% in its first year. Again, this calculation is based on a hypothetical assuming the tax had not been in place. Unsurprisingly, the study also found that while soda sales fell within the city limits, they rose in surrounding areas, and self-reported soda consumption did not decline after the tax was introduced.
Though there is no evidence soda taxes have any positive impact on obesity, city and state officials are increasingly tempted by the prospect of raising revenue under the guise of protecting children.
But elected officials should be wary of reaching for this seemingly easy tax. Cook County’s proved so toxic it was nixed within months of implementation. In Philadelphia, Mayor Jim Kenney’s soda tax remains wildly unpopular despite being used to fund universal pre-K. On the revenue side, Philly’s soda tax fell $13.6 million short of projections in 2018 thanks to cross-border shopping.
It’s always a dangerous game to use a high tax on a narrow category of products to fund public services. More often than not, this reckless fiscal approach results in the need for even higher taxes when revenue projections disappoint and result in cuts to services.
The bottom line is that soda taxes don’t work by the very measures their proponents set for them. The nauseating attempt to turn soda into the new tobacco and Coca-Cola into the next Philip Morris strains the credibility of public health bodies to the breaking point.
Guy Bentley (@gbentley1) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a consumer freedom research associate at the Reason Foundation and was previously a reporter for the Daily Caller.
