Monday, February 13, 2012

Sugar Tax? : An economically conscious consumers point of view

More than 35 million deaths each year result from non-communicable diseases, including diabetes, heart disease and cancer. The greatest influences of these deaths are given to tobacco, alcohol and diet. Tobacco and alcohol are government regulated, but diet is not. The goal of a sugar tax is ultimately to discourage the consumption of added sugar. The plan would include a sugar tax, fast-food outlets and convenience store zoning ordinances in low-income communities and around schools, drinking age requirements for sports drink and sugary beverages, limiting or banning television commercials for sugar enhanced products, and the removal for fructose from the U.S. Food and Drug Administration’s list of items recognized as safe products which would force sugar enhanced products to seek FDA review.
In the book “Alcohol: No Ordinary Commodity” there are four criteria listed that justify government regulation: It’s unavoidable in society, its toxic, it can be abused, and it’s bad for society. According to Lustig sugar meets that entire criterion and needs government regulation. “The U.N.’s Food and Agriculture Organization says that in 2007, Americans consumed more than 600 calories' worth of added sugar each day.” The argument made by Lustig suggests that can no longer be seen as a supplier of empty calories. Metabolic syndrome is the main reasoning behind Lustig’s call for government regulation on sugar. Figure 1 shows the percentage of adults who had metabolic syndrome diseases such as diabetes, heart disease, high blood pressure, and non-alcoholic fatty liver disease. “20% of obese people don’t have these diseases, but 40% of normal-weight people do.” Based on these figures, Lustig believes the sugar is to blame.



Figure 1: Percentage of Adults with Metabolic Syndrome Diseases in 2007

The sugar tax is coined the “Possible Dream” instead of the “Pipe Dream” because it has been implemented abroad. Canada and some countries in Europe already have sweet taxes, and Denmark is starting to focus on a sugar tax after creating a fat tax. “For both alcohol and tobacco, there is robust evidence that gentle ‘supply side’ control strategies which stop far short of all-out prohibition – taxation, distribution controls, age limits – lower both consumption of the product and the accompanying health harms,” the Lustig’s UCSF trio writes. “Consequently, we propose adding taxes to processed foods that contain any form of added sugars.”
Karen Kaplan author of the article from Los Angeles Times argues that a sugar tax is a good idea. However, I do not believe sugar tax is the solution. The food industry has numerous issues with product quality and price, but it will never have an issue with demand. Because food is a commodity, it is viable to solicit government regulation. Government regulation serves two purposes: to discourage certain activities and to create revenue. Discouraging sugar use is the benefit to the citizens, but potential tax revenue might be a good incentive as budget cuts are becoming a familiarity. If a sugar tax is implemented, it will most likely be subject to tax increases like cigarettes and alcohol. This will be counterproductive for the benefits government may reap because tax increases ultimately decrease the transactions surrounding the good. So doubling the excise tax rate on a good or service won’t double the amount of revenue collected. 

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