The push is on for a soda tax. Supporters say it’s a way to improve health problems, and oh, by the way, you could close those messy government budget gaps. Well, which is it? If raising taxes on sugary drinks is supposed to cut down on the use of those products why expect a declining revenue source to deal with a budget problem?
This is the same argument often made to support tobacco tax increases. While raising taxes would cut consumption that means that any tax revenue attached to a product would likely fall over time. Such taxes will not be the answer to solving the budget crisis.
Yet, according to a Los Angeles Times article, the Center for Science in the Public Interest, said billions of dollars can be raised to offset budget problems with a soda tax increase. Yale University has a calculator on a website to determine how much a state or city could raise with a tax on sugary drinks.
Interestingly, the Yale calculator gives an option to determine adding the tax on diet drinks as well. That suggests the soda tax proposal is about opening up a new revenue source rather than funding health concerns.
The calculator indicates that California could raise $1.8 billion in revenue by taxing sugary drinks and $2.9 billion with the addition of other drinks. But these are static calculations. If the tax would cut consumption, as proponents suggest, then these numbers would be smaller.
Of course, there is an obvious place to go for the proponents of tax increases if the soda tax is passed but does not bring in desired revenue. Turn the same argument on other products like candy or snack food and tax them. Such a move would be inevitable. In fact, the Center for Science in the Public Interest calls its soda tax calculator the “Liquid Candy Tax Calculator.” That’s a pretty good indicator that candy will also end up in the tax sights.
But there lies a problem. It seems voters object to taxing snack foods. California attempted to tax snack foods in the early 1990s. The legislature passed the tax but the people revoked it by initiative a year later. California is not alone. In recent years, nine states had repealed existing snack taxes – often within a few years of enactment.
The new pitch for raising taxes on soda or snack products is that the revenue will be used in the war against obesity. To make the point, the taxes would be set aside in a special fund to deal with the obesity problem.
Isolating pockets of money is becoming an increasing problem for budget writers. Revenue cannot be moved between programs when necessary. Of course, when the new tax is established initially, there is an opportunity for budget writers to substitute the new tax for health purposes previously funded by general fund money thus solving some of their budget problems.
And, that’s the point. Soda and snack taxes have traditionally been used as budget balancing tools. Even dressed up in armor to fight health issues that is still the purpose.