Payment of Taxes

The Unfolding, Polarizing Soda Tax Experiment

Add one more U.S. city to the rolling soda tax experiment. Last week Chicago began taxing sweetened beverages at a rate of a penny per ounce. A lawsuit by the Illinois retail merchants association delayed the the tax by a month. On July 28, a judge dismissed the suit and cleared the way for the tax.

Cook County expects to add $50 million to its tax revenues this year with the tax. It applies to fountain drinks and packaged drinks sweetened with either sugar or low-calorie sweeteners. The government loves it. Merchants, not so much.

And if you drink your sugar from a Starbucks barista, you don’t have to pay the tax.

Stirring Passions and Polarized Politics

You’ve probably noticed that we’re living in a polarized age. And this sweetened beverage tax fits right in. Writing in the Chicago Tribune, Mary Schmich notes that supporting the soda tax can get in the way of friendships. When she expressed support for the tax, one friend told her, “You just say that because you don’t drink soda.”

So people choose their friends accordingly. Starbucks buddies can stick together, secure in their untaxed status. “My friends and I are all in agreement for the tax,” said one woman. “I guess that’s why we choose the friends we do.”

But make no mistake. This subject stirs passions. During Q&A at our AADE session last week, a dietitian earnestly told the group that “sugar sweetened beverages are the source of all evil in the world.” Wow!

Banking on an Association with Health Outcomes

This soda tax experiment banks on translating an association into a cause and effect relationship. No doubt, taxing these beverages will drive down consumption. That’s already been seen in Mexico and Berkeley.

What’s unknown is the net effect on health. People have lots of choices about what to eat and drink. Drive down soda and beer might go up. Or chocolate milk. Or other substitutes.

Advocates for the tax are counting on people switching to plain water and getting a health benefit. Maybe that will happen. Or maybe not.

But objectivity in measuring the outcomes from this experiment will be crucial. And bias about this subject is not limited to the beverage industry. Bias might also creep into analyses from people who are certain that these drinks are evil.

It might take a few decades for everyone to calm down.

Click here for more on the soda tax in Chicago. Here, here, and here you can find more on Mexico’s tax in Health Affairs.

Payment of Taxes, painting by Georges de la Tour / WikiArt

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August 7, 2017