Soda tax myths: Will soda taxes really cost consumers more?

by on June 2, 2014

Soda Tax

Which costs more – having an unhealthy population, or doing something about it? A common argument against soda taxes and warning labels on sugary beverages is that they will end up costing us more at the store. But out of control rates of diabetes and other diseases linked to drinking sugary beverages are already costing us more, just not at the cash register.

In San Francisco, a proposed soda tax could raise as much as $31 million annually (the “cost” to consumers), to pay for nutrition education, cooking lessons, healthy school meals, and more places to get physically active – vital tools needed to help improve public health. But a December 2013 report from the SF Board of Supervisors Budget and Legislative Analyst shows that costs incurred by SF’s obese and diabetic populations that are attributable to the consumption of sugar-sweetened beverages is between $48 and $61 million dollars annually.

Should SF continue to ignore the impact of sugary drinks on public health, at a cost of $48-61 million, or raise $31 million to start doing something about it?

High price tag for poor health

Adding the additional costs of absenteeism, lost productivity at work, and inability to work due to disease-related disability drives the price tag for poor health far higher. Statewide in California, the annual cost of diabetes alone is over $27 billion, according to The American Diabetes Association.

Compare that $27 billion to the less than $400,000 estimated annual cost to implement SB 1000, the legislation passed in the California Senate on May 29, that would place a warning label on sugary beverages sold in the state.

Does it cost more to tolerate poor public health, or to start doing something about it?

Raising money for community health

Shelf prices for sugary drinks may indeed increase with a soda tax, but that’s intentional. One aim of the tax is to discourage consumers from over indulging in drinks that have been linked to diabetes, heart and kidney disease, metabolic syndrome, pancreatic cancer, increased risk of stroke, and tooth decay, diseases considered “regressive” because they disproportionately impact low income people.

But let’s not forget the other goal of the tax is to raise money to pay for exactly the kind of interventions that will promote good health in a population that is becoming increasingly sick. Even the American Beverage Association supports “physical education in schools, nutrition education and improved access for physical activity in communities across the nation” as pathways to good health.

But someone has to pay for these interventions that everyone agrees are crucial for community health. It makes sense for government leaders to step in and raise the needed funds via a sugary beverage tax.

Government subsidizes soft drinks

After all, the government is already involved with the price of soft drinks. The same consumers who would face higher prices for the sweetened drinks that some call “liquid diabetes”, currently help underwrite the low store price of those beverages with their tax dollars.

Government subsidies paid for corn result in plentiful cheap corn to produce the sweetener most commonly found in US soft drinks, high fructose corn syrup. These subsidies cost taxpayers $84 billion between 1995-2012, according to the Environmental Working Group.

When an excise tax on sugary drinks (H.151) was proposed in Vermont a few years ago, Jon Margolis, former chief national political correspondent for the Chicago Tribune, explained:

“Federal policy is without doubt one of the reasons corn syrup and the drinks it flavors are so cheap and popular. This means that H.151, which would “impose an excise tax on sugar-sweetened beverages” is not, as some suggest, an attempt to insert government into the marketplace. When it comes to sodas, government has been inserting itself into the market place for generations. In effect, sugar-sweetened beverages are government-subsidized. That’s what helps make them so cheap.”

The hidden costs of sugary drinks

The $3 or so we pay for a 12 pack of soda seems cheap until we realize that the real cost also has to include not only the price we pay at the cash register, but also the costs of the diseases exacerbated by sugary drink consumption, and the share of our taxes that go to keeping sweetener prices low. In reality, Americans are paying a very steep price for their cheap soft drinks.

Add it up: the $245 billion cost of diabetes nationwide, plus the $312 billion cost of heart disease and stroke, and the $147 billion cost of obesity, and let’s not forget the billions in corn subsidies. As the late Senator Everett Dirksen is thought to have said, “A billion here, a billion there, and pretty soon you are talking real money.”

And that’s just the financial cost. The pain and suffering of those stricken with diseases tied to sugary drinks, as well as the suffering of their families, is incalculable.

It’s time we started trying to reduce these hidden costs of sugary drinks. What better way than through the nutrition education, better access to healthy food, and more opportunities to exercise and get fit that would all be made possible by SF’s soda tax?

Don’t let Big Soda’s scare tactics fool you. A small price increase at the cash register has the potential to yield big savings in the hidden costs we all paying for cheap sugary drinks and rampant poor health.

Read other articles in the Soda Tax Myths series:

Soda Tax Myths: Are Beverage Companies Friends to the Poor?

Soda Tax Myths: The Arkansas Argument
Soda Tax Myths: Soda Taxes Distract from Real Issues
Truth an Early Casualty in SF’s Soda Tax Fight
Soda Tax Myths: Are Beverages Being Unfairly Targeted?
Soda Tax Myths: Do Soda Taxes Reduce Obesity Rates?
Can Big Soda’s Statistics Be Trusted?
Soda Tax Myths: Does Big Soda Support Free Choice?

NY Soda Tax Advocate’s Advice for SF and Berkeley
Heartless Big Soda Terrifies Mom and Pop Businesses

Soda Tax Myths: Big Soda Says It’s Your Fault If You’re Fat

Soda Tax Myths: Do All Foods Really Fit in a Healthy Diet?

An RD Explains Why All Foods Don’t Fit in a Healthy Diet: Andy Bellatti

More on debunking soda tax myths.

Dana Woldow has been a school food advocate since 2002 and shares what she has learned at PEACHSF.org. Follow her on Twitter @nestwife, or read more than 140 characters of her writing in her complete archive.

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Dana Woldow

Dana Woldow advocates for policies, including soda taxes and better school meals, to improve the health of all children through better nutrition and education. She has been a leader in improving school food in San Francisco since 2002, when she formed a school nutrition group to run a pilot removing junk food from SFUSD's Aptos Middle School, where her children were students; the pilot was expanded to all of the city's public middle and high schools in 2003. She served as co-chair of the SFUSD Student Nutrition and Physical Activity Committee from October 2003 to June 2011.

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Filed under: Soda Tax/Food Politics