“Calorie Offsets” Instead of Soda Tax

Taxing soda pop, which seemed like a crazy idea just 12 months ago, is gaining traction with academics and politicians.

Recently, President Obama said a soda tax is “an idea that we should be exploring.” And in a research paper published yesterday by the New England Journal of Medicine (NEJM), a team of 7 scientists recommend taxing every fluid ounce of sugary soft drink by one penny. Those pennies add up to $15 billion annually that the federal government can spend on consumer education and healthcare.

The recommendations are based on research that shows:

1. consumption of sugary drinks has directly contributed to obesity in the US.

2. raising the price of soft drinks will reduce its consumption.

Of course the beverage industry is all over this, and in it multimillion dollar campaign, including a website nofoodtaxes.com, states:

Discriminatory and punitive taxes on soda and juice drinks do not teach our children to have a healthy lifestyle and have no meaningful impact on child obesity or public health. They just further burden working families already struggling in this trying economy.

Muhtar Kent, CEO of the Coca Cola Company calls a soda tax “outrageous” and likens the very thought of it to a communist conspiracy:

“I have never seen it work where a government tells people what to eat and what to drink. It if worked, the Soviet Union would still be around.”

Mr Kent is right, the government shouldn’t decide for consumers what to eat or drink.

But it should protect consumers from unscrupulous corporations who are literally shoving junk food and drinks down our throats. Everywhere we turn, soft drink machines, snack dispensers, candies, chocolate bars, more soda, more snacks. Not to mention the endless commercials, advertisements, and other branding brainwashing activities all aimed to increase our consumption and their profit.

However, as we have suggested in the past, taxing the consumer is not the way to go.

What the government should do is to tax these corporations, big time. This, through mechanisms similar to carbon offsets in the industrial sector. Let’s call these calorie offsets for now.

Here’s how calorie offsets would work:

for every ton of added sweetener (sugar or corn syrup), a company would contribute $3000 to government programs aimed at obesity reduction. Three thousand dollars is equivalent to the penny per ounce tax suggested by the NEJM.

This suggestion will likely infuriate Mr. Kent and his friends at the ABA even more than taxing consumers. So what. Coca Cola and PepsiCo are among the most profitable companies in the food industry. The Coca Cola company, worth $120 Billion, had a net profit of $6 billion last year on sales of $30 billion. Not bad for a company that sells water and fizz mixed with high fructose corn syrup and artificial colors.

What are the advantages of Calorie Offsets?

1. They reduce the profitability of sugary drinks and encourage manufacturers to shift to healthier products.

2. If a company chooses to raise prices of soft drinks to maintain margins, that’s perfectly fine. Market forces will work for the benefit of the consumer. Shoppers will now revolt against said company by buying from its competitor. The government won’t be the scapegoat. We’ll see then who’s accused of discriminatory and punitive taxes.

3. The offset money will be marked and used, of course, to undo the the damage to the public health and to educate the public.

To summarize, as their customers are getting fatter and sicker, beverage industry shareholders are getting richer and richer. The government should require these companies to directly foot the bill for the damage that they are causing to the public.

What to do at the supermarket:

A suggestion for those of you concerned about a potential soda tax – A family of 4 can save $500 a year just by switching from soft drinks to tap water.

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