Washington Post Columnist’s Compelling Critique of England’s New “Sugary Drink” Tax

PostOn March 16, England’s Chancellor of the Exchequer George Osborne announced during his report to the House of Commons that an excise tax will be imposed on soda products and other “sugary drinks.” In today’s Washington Post (which, by the way, editorially endorsed the concept of a tax on sugary product in the U.S. last November), columnist Catherine Rampell offered a compelling critique of England’s new nanny tax.

In addition to noting the regressive nature of taxing disfavored products or ingredients—a flaw that can’t, in her opinion, be outweighed by concrete benefits such as obesity reduction—Ms. Rampell criticizes the arbitrariness of targeting one of many inputs that contribute to obesity:

Instead of arbitrarily singling out one category of bad foodstuff for taxation — and the categories of bad foodstuffs will always be somewhat arbitrary — a more effective route to reducing consumption of excessive sugar or calories might be a universal, graduated sugar or calorie tax.

But even that still doesn’t quite seem fair or, for that matter, efficient. After all, a calorie tax would also hit people who consume more calories because they are very active, such as marathoners. Besides being regressive, a tax on calories or sugar would also effectively, if unintentionally, make it more expensive for trim people to exercise.

In other words, a lot of inputs go into determining whether a person is obese. Taxing some of those inputs distorts the relative prices of those inputs, but it doesn’t necessarily change the desired output: obesity rates.

Which raises the question: Why not just target the output, rather than some random subset of inputs? We could tax obesity if we wanted to. Or if we want to seem less punitive, we could award tax credits to obese people who lose weight. A tax directly pegged to reduced obesity would certainly be a much more efficient way to achieve the stated policy goal of reducing obesity.

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