Study: Soda Tax To Make Little Dent On Obesity

Digital Journal, May 24, 2009.

That obesity has reached crisis proportions in the U.S. has been talked and written about ad nauseam. Still, people continue to get fatter.

For some time, the drive to combat the nation’s collective bulge has been on at various levels.

And now, it’s also began at the policy-making level. New York Governor David Patterson may have abandoned his attempt to levy an 18 percent tax on sugary drinks, but the idea has gained even more momentum.

The federal government is considering imposing a so-called “sin tax” on all sugary beverages to help defray the cost of extending health insurance to all Americans.

Supporters argue that the tax will act as a deterrent against excessive consumption of fizzy drinks. This, in turn, will reduce obesity-induced health problems and shrink the government’s healthcare burden.

But that isn’t going to make people significantly skinnier, writes Josh Barro of the Tax Foundation, citing a study done by Emory University.

The researchers estimate, he writes:

A 1% increase in the soda tax rate decreases mean adult body mass index by 0.003. So, even if sodas faced a 58% tax rate (similar to the average effective tax rate on cigarettes), the authors estimate that mean BMI would fall by just 0.16 points. For contrast, mean American BMI has risen by 2.3 points between 1990 and 2006.

He suggests a couple of alternatives that might be more efficient in tackling the problem: (1) taxing only sweetened drinks (and not diet sodas as currently proposed); and (2) removing sweetened drinks from the coverage of food-stamps so that they aren’t exempted from taxes. Both these approaches, however, he says, are “paternalistic.”

A third option, proposed by The Economist, is “subsiding weight loss, by paying people to lose weight.”

This method didn’t prove very successful, either, as research by the Cambridge, Massachusetts-based National Bureau of Economic Research, indicated.

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