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The Los Angeles Times reports that so-called “sin taxes” – that impose extra taxes on food products that are high in fat and low in nutrition – seem to be “catching on with the American public.” The Times writes that a recent Kaiser Family Foundation poll showed “that 55% of respondents favored a tax on unhealthful snack foods, up from 52% in April. Support for a soda tax rose to 53% from 46%. And 63% of those who opposed the idea said they would change their minds if the revenue were used to fund healthcare reform and combat health problems related to obesity.”

However, critics of the approach say that sin taxes unfairly target poor people and, in the case of junk food, aren’t even significant enough to have an impact on the nation’s obesity rates.

Here’s the argument against it, as characterized by the Times:

“To make a significant dent in escalating rates of obesity, taxes would have to be steep and widespread. Two-thirds of states now impose a modest soft-drink tax -- the average rate is 5.2% -- and though the taxes are linked to a drop in body weight, the difference is extremely slight: about 3 ounces for a 5-foot-10, 279-pound person. Taxes on foods such as candy bars and microwave popcorn are even less effective, according to available data.

“There's even evidence that such taxes can have the perverse effect of increasing consumption of fatty or salty foods. There are reasons why taxes curb smoking but might have little effect on obesity. Raise the cigarette tax, and smokers can either pay up or quit. Raise the tax on sugar-sweetened colas, however, and customers can switch to sports drinks or punch, which often contain even more calories.

“Moreover, tobacco taxes apply to all products you can legally smoke. Junk-food taxes are less logical. A 5.5% snack tax in Maine, for instance, covered blueberry muffins and fresh-baked apple pies, but not English muffins or frozen pies. Tobacco taxes are also much higher than anything likely to be adopted for food and beverages. Slapping a 10% tax on a $1.50-bottle of Coke would raise the price a mere 15 cents -- not enough to persuade most shoppers to drink Diet Coke instead. Many calorie-laden foods are simply too cheap to be priced out of the market by any but the most draconian of taxes.”

And, some research suggests that if people were faced with higher costs for non-nutritious foods, they’d actually spend less money on fruits and vegetables as a way of offsetting the increased prices. And so, sin taxes might actually have the opposite effect from what is intended.

At the same time, proponents of such an approach argue that if health care systems in the US really are broken, then it is critical to deal not just with symptoms but also the cause – which is unhealthy people putting too much stress on the health care infrastructure, leading to artificial and arbitrary cost increases.
KC's View:
The more I read this story, the more I got queasy about it. There’s just a social engineering aspect to it that is a littler unappetizing…I’d love to see people eating healthier food, but taxing them into submission doesn’t strike me as the best approach.

I’m with Jimmy Buffett on this one – a little sin is good for the soul. (Besides, haven't we sort of devalued the nature of sin when we start equating it with sugared soft drinks?)