Ask the Ethicist: Leaving a bad taste in the mouth

Q: “I’ve thought that the soda tax idea in New York is a great idea. I’ve read some things where ethics people have rejected the idea. Why not tax soda?”

A: My economics classes were a long time ago, but I recall that the fundamental law of demand states that as the price of a good or service increases, the demand for it – or the ability of people to afford it – will decrease. This is part of what legislators are thinking when they seek to tax products that they deem to possess negative social value. New York Mayor Michael Bloomberg entertained the notion of passing a tax on soda pop to help fight against the “obesity epidemic.”  The other part of this type of measure is that additional revenues could be diverted towards mitigating the social damage that the taxed products contribute to. This has long been the logic in Ontario with “sin taxes” on alcohol and tobacco products.

There are four major issues with such an idea. Firstly, there is little evidence that such taxation reduces consumption. Recently, Denmark passed a tax on food products containing more than 2.3 per cent saturated fat. This will serve as a great test case for other nations to observe, but has one major drawback; food prices in Denmark are already quite high, whereas in North America, food is relatively cheap, and unhealthy food is cheapest of all. So, in our context, a price increase on unhealthy foods doesn’t price them out of reach for most.

The second issue relates to the first. Blanket taxation doesn’t have equal effects – those who are poorer are more affected than those who are richer. If we then state that data shows the poor tend to be more obese, then we have to justify the intentional and explicit use of differential treatment of the poor by the government.

Thirdly, the tax on soda seems a bit arbitrary, since other drinks which are “not soda” have negative impacts on obesity as well. According to the company’s website, a can of Red Bull energy drink has 27 grams of sugar, as well as ample caffeine, which is not a harmless substance either. Fruit juices and drinks can be highly sugared, and yet avoid classification in many ‘soda-tax’ proposals. So the problem isn’t addressed in any substantial way, only the names of the culprits are different (juice instead of soda).

Lastly, engaging the government in taxing foods which are unhealthy for us, leads us into a potential slippery slope of interventions. Almost all foods that are part of a healthy diet are unhealthy in unreasonable proportions, so where do we define some foods as “unhealthy” and others not?

Typically, governments tax certain behaviours to discourage them, and provide tax breaks for behaviours it wants to promote. There might be some room for taking the positive, non-punitive, approach to using the tax system to promote healthy choices, rather than trying to tax the unhealthy ones.