Don’t Tax Soda, Tax Sweeteners - Miller-McCune
Public-health officials and policymakers across the United States have been talking a lot lately about tackling the epidemic of obesity through smaller nudges like a per-ounce tax on soda. Not surprisingly, as enthusiasm for this idea expands, so too has soda-tax scholarship.
“Our take on this was basically that everybody is talking about a soda tax, so we stepped back and said, ‘Wait a minute, this is not very well targeted,’” said John Beghin, an economist at Iowa State University. “If you want to impose a tax and reduce calorie intake from sweeteners, there is a better way to do it.”
He and colleagues Helen Jensen and Zhen Miao propose a more inventive solution in a new paper published in the journal Contemporary Economic Policy. Instead of sticking a fat tax on soda, they suggest a more effective policy would tax food producers on the corn syrup, sugar and other sweeteners they stick into products long before consumers get to them at the grocery store.
The authors are quick to stress that this isn’t the policy cure-all for obesity (or even the best way to curb it). But if politicians are determined to create some kind of fat tax, this would be the way to do it.
Such a tax would incentivize producers, rather than consumers, to change their behavior, and it would move the policy solution closer to the actual problem. Economists talk about this as the targeting principle — the idea that policy instruments should cut as close to the source of the trouble as possible.
In this case, if we want to target the unhealthy sweeteners in food and drinks, we’d do better to tax those ingredients directly rather than the entire can of soda. The researchers’ model suggests that, relative to a tax on unhealthy foods, a direct sweetener tax on producers would impact consumers less while also getting a much greater calorie-reduction bang for the buck.