The soda-tax solution
The United States needs a healthcare sweet spot -- a way to raise revenue for needed programs now and a way to lower healthcare costs in the future. Taxes on sugar-sweetened beverages -- those with added sugar, high-fructose corn syrup or so-called fruit juice concentrates -- would answer that need, and California could be the test case that proves it once and for all.
There is arresting logic to the numbers. There are already minor surcharges on soda in many states -- fractions of a cent per ounce in most cases. That’s not enough. What’s needed is a penny per ounce added to the cost of sugary beverages. That amount would raise about $150 billion nationally over the next 10 years; in California, it would raise $18 billion. At the same time, the reduced consumption of soft drinks produced by a penny-per-ounce national tax would have direct health benefits, estimated to be at least $50 billion over the decade. This $200 billion could make an enormous difference in addressing the nation’s mounting healthcare costs.
The average American drinks 50 gallons of sugared beverages annually. Once dominated by a few flagship beverages such as Coke and Pepsi, the marketplace has exploded into a wide array of fruit drinks, sweetened teas, energy drinks, sports drinks and other versions of sugar water. But two companies still reign: Together, Coca-Cola and PepsiCo control three-quarters of the world beverage market.
Sugared beverages are marketed with fierce precision, using sports stars and other celebrities and promising benefits ranging from increased energy to better memory. Product placements in television shows, such as Coca-Cola on “American Idol,” expose vast numbers of children to hidden marketing. Portions are also an issue -- the 8-ounce bottle of the 1950s has morphed into a 20-ounce behemoth. A regular 20-ounce soda contains 17 teaspoons of sugar and 250 calories.
The consequence? By the mid-1990s, per capita consumption of sugared beverages surpassed that of milk for children. Americans, including children, consume about 170 calories per day from these products, enough to have contributed substantially to the obesity epidemic and, independent of body weight, caused many cases of diabetes and heart disease. A recent study by UCLA and the California Center for Public Health Advocacy showed that 41% of California children drink soda every day, and that adults who drink soda are 27% more likely to be overweight or obese.
The industry has launched an all-out assault on “soda-pop taxes.” Beverage companies and their front groups claim that it is unfair to pick on soda when there are many factors contributing to obesity.
However, the scientific evidence linking sugared beverages with weight gain is stronger than for any other food category. Also, sugar in liquid form seems unique in its ability to slip past the body’s calorie-detecting radar, perhaps because throughout evolution, the only beverage humans drank in large quantities beyond infancy was water. In other words, when you drink soda, you don’t feel as full as if you were eating solid food, despite how many calories you’re taking in. In addition, conventional sugared beverages lack fiber, antioxidants and other protective nutrients that might mitigate the adverse effects of their essentially empty calories on health.
The industry also claims that a beverage tax would hurt the poor (the same argument was used by tobacco companies to fight cigarette taxes). But as with tobacco, the poor are most hurt by diseases such as diabetes and obesity and stand to benefit the most from programs that could be supported by tax revenues. What’s more, the average family could save several thousand dollars a year by cutting out soda. There is no question a tax would decrease consumption of sugar-sweetened beverages. Economists estimate a 10% price increase would result in a 10% consumption reduction. Otherwise, why would the beverage industry use a strategy from the tobacco playbook and establish a front group -- Americans Against Food Taxes -- meant to evoke images of a vast consumer uprising?
Congress has discussed a tax on sugared beverages as a means to fund healthcare but thus far has yielded to industry pressure and taken no action nationally. It is often the case, however, that states and cities take action before the federal government mobilizes. The California Legislature is set to hold hearings in November to consider taxes and fees on soda as a way of addressing obesity and healthcare problems in the state. With a penny-per-ounce decision, California could set an example for the rest of the country.