A Sin Tax on Soda?


Americans love their soda. We spend $56 billion on sugar-laden soft drinks every year and one federal official wants to tap into that giant pool of cash. He’s proposing a soda tax based on the amount of sugar in a given drink (scary fact: the average person eats 175 lbs of sugar every year).

The Argument

Dr. Thomas Frieden, director of the U.S. Centers for Disease Control and Prevention, proposed the tax in a recent press briefing, noting that soda is one of the primary reasons Americans are overweight. “[It] plays a particular role in the obesity epidemic,” he said.

Soda wouldn’t be the first bad habit to be taxed with health benefits in mind. Higher taxes on cigarettes have led to a decrease in adult smoking by about 25% and a decrease in smoking among teens by 50%, Frieden said.  

Along those lines, industry experts predict that higher soda prices will strongly discourage people from consuming soda and sugar-sweetened beverages, Frieden added.  And that revenue could help offset the rising costs of preventable health conditions like obesity.

Unintended Consequences

While the proposed tax aims to improve the health of Americans by deterring consumers from drinking the sugary stuff, it could have an unintended consequence: penalizing those who are already hard-up for cash.  

That’s because soda is often cheaper than healthier beverages like fruit juice, according to FoodRoutes, a non-profit organization devoted to educating consumers about food and its origins.  A tax on soda could have the most impact on people who aim to get more beverage for their money.

What it Could Mean For You

About 40 states already tax things like soda and junk food, according to the Center for Science in the Public Interest, but the rates are so low that you may not even notice.

For it to be most effective, a new soda tax would have to be levied based on how many grams of sugar a soft drink contains as opposed to just based on the price of the beverage, says Frieden, in order to equally tax those who buy their soda cheap or in bulk.

Freiden admits that soda drinkers could switch to other high calorie items, like candy for instance, if the tax were passed, “But there is clear evidence … that increasing the tax would significantly reduce consumption as well as generate quite substantial revenues,” Frieden said.

Frieden did not suggest whether this new soda tax would be on the state or federal level.

Related Stories:

Companies Push Workers to Get Healthy

5 Ways Obama's Health Plan Will Affect You

How to Calculate Your Own Health Care Costs

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

Show Comments

Back to Top