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Paterson's soft drink Nanny Tax potentially more of a problem than solution

Posted by Howard Owens on January 10, 2009 - 12:42pm
Tagged in
  • governor Paterson
  • health
  • soft drinks
  • taxes
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Daily News writer Paul Mrozek has a lengthy piece out today on Gov. Paterson's plans to tell parents how to raise their children -- specifically how to control their diets.

He includes all the facts from the governor's perspective, but passes over one lone skeptical voice deep in the article.  There is little focus on the propriety of New York engaging in social engineering, nor the degree to which this plan is going to create new bureaucracies and hence new expenses, whether there is any evidence such a plan will work, nor how the plan will impact businesses and create new costs that will be passed along to all consumers.

The most far-reaching of the proposals is an 18 percent sales tax on sugar-sweetened beverages such as soda. Juices from fruit such as oranges and grapes are excluded from the proposed tax.

In the past 40 years New York residents have increased their consumption of pop from an average of five 12-ounce cans or bottles per week to 11 per week. Research has shown that consumption of non-diet soft drinks is one of the primary factors that increases the risk of obesity in children and adults.


"No question about the link. We have a core fact in front of us," Daines said.

Not so fast. There is a question. A big fat question.

To blame all low-income obesity on soda pop alone is myopic. Low-income diets tend to be heavy in empty carbohydrates of all kinds, not just sugar. Children living in food insecure homes consume less healthy food. One reason there is such an abundance of empty-carb foods can be traced to farm subsidies for corn, but even that connection is a rather simplistic view of the obesity problem among poorer children.

There is also the question of proper exercise.  In too many homes, children are allowed to watch TV or play video games rather than being required to run around outside.

These are largely parental issues, not government issues.

If the government wanted to do something to help, they would restructure aid programs to make it easier to buy healthier food.  Given a choice, most parents would pick more meats, fruits and vegetables. But right now these options are beyond their budgets. 

Driving up the costs of the high-carb foods isn't going to help them afford the good foods.

The article says, "You raise prices. You provide alternatives."  But what are those alternatives. How are they paid for and provided?  If the alternatives are paid for by the tax, how does the state ensure sufficient revenue for those alternatives once consumption of the taxed items goes down?

Will taxed drinks receive some sort of stamp like alcohol and cigarettes?  If so, aren't we just creating yet another environment for potential illegal black market activities?

And one issue about the proposed tax I've not seen discussed anywhere is the impact on business: Who will levy the tax? Will retail outlets be burdened with the the expense of tracking and tallying the tax, which could include the expense of reprogramming cash registers?  And if the tax is imposed at the wholesale level, won't it just get passed along to all consumers of soft drinks and other beverages from those particular wholesalers?

What about vending machines? Will vendors be required to have two prices on drinks in their machines -- one for taxed items, and one for non-taxed? Or will us diet drinkers just pay more? Who pays for the expense of reprogramming machines or replacing machines that aren't capable of handling tiered prices on soft drinks?

Per usual, any time the government starts interfering in private lives and private enterprise, there are as many if not more problems created than solved.

Here's an appropriate and timely video from Reason Magazine.

  • Howard Owens
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Posted by JT Hunt on January 10, 2009 - 1:03pm
AM 700 radio, 50k watt giant station in Cincy, discussed this tax one night. i agree with their view of this as a "trojan horse" tax. it gets put on the books and opens the door to future soda tax increases. please refer to history cigarette taxes. if you had been smoking as you waited for that tax to come down, you would have smoked many cartons by now. soda tax gets levied, but is this going to deter a habitual drinker of a daily can of soda from not buying his/her daily fix? doubt it. all it does is cause them annoyance of scrounging about for more loose change.
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Posted by Frank Cook on January 10, 2009 - 1:55pm
Maybe not, but the cigarette taxes have in fact lowered the rate of people smoking. Maybe it took some time, but eventually it had an effect.

I don't think this proposal is assuming that soda is the biggest factor in the obesity rate, it just happens to be one factor of many. But that's no reason not to discourage it. Nobody's saying you can't drink soda, just like nobody's saying you can't smoke cigarettes. It just costs a few cents more.

Besides, with the current state of the state, we could use some more tax revenue. Then again, I don't drink soda.
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Posted by Howard Owens on January 10, 2009 - 2:21pm
Frank, if people are motivated by a tax on cigarettes not to smoke, they don't really need a substitute.

But people have to eat and drink. If you're going to drive up the cost of consumption, without bringing down the cost of substitutes, you're creating problems rather than solving them.

In other words, comparing the cigarette tax to the soda tax is a false comparison.

It's also a false notion to say "nobody says you can't drink soda." No, the government is saying "it's our business how much soda you drink, so we're going to try to interpose our will on your behavior." That's just repulsive.

Also, it's unclear whether this tax will generate general tax revenue. The story says the government will provide alternatives? What's unclear is what are those alternatives and how will they be paid for? Also, any new government tax program creates new government expense. In other words, not much of this tax is going to help offset any budgetary challenges.

This program just smells of a raft of unintended consequences, more bloated government and hire prices on everybody, soda drinkers or not.
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Posted by Russ Stresing on January 10, 2009 - 4:21pm
Trojan horse all the way. This is intended to condition people to accept taxes that are not 'for your own good' but are for those chubby children's good. Cigarette taxes were originally imposed not because they were supposed to be a deterrent, but because they were an enormous income source that people who didn't smoke merely shrugged at and people who smoked were wiling to pay. It was when it became clear that cigarette smoking created a terrible cost in lives and health-care expense that the taxes were easily increased.

Some people like pop. (This is still WNY , isn't it? It's not soda.) Some people like donuts. If they tax that guy's pop today, bet your ass they're comin' for your donuts, officer. They're trying to disguise their grasping reach as a helping hand.
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Posted by Frank Cook on January 10, 2009 - 4:27pm
I disagree Mr. Owens. I dare say that nobody is drinking soda to survive, and water is free.

And to say that all (or even most) of the tax revenue generated by this tax will go towards other government expenses is an unfair and arbitrary assumption.

To a point isn't it the government's job to help maintain the welfare of the state? And since obesity (and diseases associated with it) is a huge blow to the state, I would say that this tax is in fact justified as much as a cigarette tax.

Junk food isn't necessary to survive, and even without offering cheaper alternatives, if the cost of living increases because of this, wages will increase accordingly... Economics 101.
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Posted by Howard Owens on January 10, 2009 - 4:37pm
Frank wrote, "To a point isn't it the government's job to help maintain the welfare of the state?"

One word: No.

The fact that it has to be qualified with "to a point" shows its a slippery slope of government encroachment into private lives.
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Posted by Russ Stresing on January 10, 2009 - 4:39pm
"if the cost of living increases because of this, wages will increase accordingly". That's not a truism. If the cost of living increases and people can't afford to buy the cars your factory creates, you could lose your job. That reduces your wages considerably. The idea that an increase in tax on pop will raise wages is a stretch.

Soda alone doesn't cause obesity nor is it the single greatest contributor to obesity. People don't die of obesity. They die of the related health risks that being overweight can increase. If you drink a 6-pack of pop a day but otherwise moderate your eating habits and exercise, you'll probably be fine. A daily cigarette habit is scientifically proven to increase your risk of cancer. If you run, watch your diet, and take vitamins, you'll still face substantially higher risk of cancer if you smoke a pack-a-day. You don't need "the associated risk factors" if you have cancer. Obesity increases your risks of disease. Cancer is a disease that kills you.

This isn't about fighting obesity. Its about cloaking a wedge tax in good feelings.
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Posted by Kelly Hansen on January 10, 2009 - 5:41pm
Anyone recall what the state did with the 911 service fee added to your cellular phone bill? 6 cents of the $1.20 actually went to 911 - the remainder went elsewhere. http://www.syracuse.com/news/index.ssf/2008/09/the_cell_phone_bill_says....

When the state wants more money, why not just say so? Why nickel and dime people to death - perhaps just a sledgehammer to each taxpayer head will do.

The nanny doesn't know what it is doing and the parents are nowhere to be seen. I can just see now the convoy traveling out of state to retrieve sugary drinks to return and sell it sans the tax. What about baseball games where a soda fountain helps to pay for league expenses? Will they check to see which tap at the bar is hooked up to sugar-free and which is a taxable tap?

Come on, Mr. governor. You sure do get points for creativity - but if you want people to visit NY and live here, you have to do better than this.
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Posted by Daniel Jones on January 10, 2009 - 5:48pm
Raise taxes on millionaires.
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Posted by Frank Cook on January 10, 2009 - 6:46pm
...Then what is the government's purpose Howard? An honest question.

Also I'm not saying I'm in love with the tax, or that it's well thought-out or that it will have incredible results. I'm just saying that it has validity, and that it's a start.

And in response to Russel, I know that the purpose of the tax is obviously not to raise wages. I'm just saying that an increase in the cost of living should not be a concern.
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Posted by Mark Potwora on January 10, 2009 - 7:55pm
This is just another way to get more money for the state to spend..Why not just call it what it is..So what is next anything with sugar in it should have some special tax put on it..Sure we all have freedom of choice,but only if we can afford it..I do not need the state forcing me to lead a certian life style that they think i should lead...That is not their job...It is mine..Its about finding a way to generate more money...So lets put Pepsi and Coke out of business,im sure that will make us a nation of slim people..
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Posted by Howard Owens on January 10, 2009 - 8:48pm
Frank, the government should limit itself to providing essential services and protecting citizen safety and property and ensuring our basic rights. Telling people how to eat and drink meets none of those requirements.
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Posted by Katie Elia on January 10, 2009 - 9:46pm
"If the government wanted to do something to help, they would restructure aid programs to make it easier to buy healthier food. Given a choice, most parents would pick more meats, fruits and vegetables. But right now these options are beyond their budgets."
These options are not beyond their budgets. Seems to me that a bag of chips costs far more than a decent somewhat healthy box of crackers. A bag of dry beans, what a dollar? This creates a meal. We eat a bit of everything in moderation. Yes even chips once in awhile. However I have found that it is definitely cheaper to eat healthy.
Taxing the junk? I'm all for it if it prevents even one obese child from consuming it. Pop/soda is a "treat." We don't need it. Some of us enjoy it as a treat and balance it with a healthy diet and lifestyle. So it will cost more. We have a choice not to buy it.
Perhaps a great way to spend the tax dollars earned from the increase would be to fund more educational programs geared at keeping kids active. We have them locally but I would imagine that more funding would increase the outreach success. Adults can make lifestyle choices. Kids? Not always. They eat what is in the house. More outreach and education would be a plus.
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Posted by Frank Cook on January 11, 2009 - 2:29am
I agree with Dan Jones.


I guess the bottom line though is that this tax probably won't be too much of an obstacle for most people, unless you drink soda in excess. Sure there's better ways to raise money and cut down on obesity, but I'm glad there's at least an effort being made. That's a start.

And to Howard, we're in agreement, I guess I was a little vague with "welfare of the state", but that's more or less what I meant. And yes, this tax does seem a little petty.
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Posted by JT Hunt on January 11, 2009 - 11:23am
OH sales tax is currently 6%. it was at 5%, but legislation passed to raise it 1% for two years to help generate revenue. when the tax expiration came about after 2 years, suprise! it was voted into permanent law. best way to keep taxes low is to not let them get on the books. they proliferate like a cancer.
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Posted by JT Hunt on January 11, 2009 - 11:35am
NY is an example of why socialism isn't beneficial for a diverse population. the government can't be all things to all people. individuals who are solely dependent on govt officials, who often abuse their power, are sure to be let down. honest capitalism rewards incentive and hard work. it makes a person with hustle actually want to get off the couch!
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Posted by Frank Cook on January 11, 2009 - 11:55am
I would agree, but unfortunately hardcore purist capitalism produces an enormous income gap.
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Posted by Daniel Jones on January 11, 2009 - 12:12pm
None of this is socialism, it's a balanced economic policy that's needed to help rejuvenate the middle class' buying power. All of this could be avoided though through a couple of actions, the first one being, as I've brought up before is raising taxes on millionaires.

A lot of Republicans would like for everyone to think that the rich pay some exorbitant rate on their income tax, the reality is this, millionaires only pay about 7 percent of their total income in taxes, that's about the same as the middle class, which I think is pretty ridiculous. The tax rate for millionaires has been cut over 50 percent, from nearly 16 percent in in 1976 to around 7 percent today, this was from general cuts and eliminating the high income tax brackets.

So, if a millionaire is paying only 7 percent of his income in taxes now then their hardly being over-burdened, there seems to be this recurring myth that they pay an unfair share. Billions could be raised in revenue by increasing their tax rate by only 3 or 4 percent.

Does that sound so unreasonable to anyone else? It doesn't sound unreasonable to me.
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Posted by Daniel Jones on January 11, 2009 - 12:13pm
By the way, all of those tax cuts for the wealthy hasn't exactly caused prosperity state-wide.
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Posted by Mark Potwora on January 11, 2009 - 8:50pm
So by taxing soda the rich will pay more taxes..i dont get the point..
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Posted by Daniel Jones on January 11, 2009 - 9:39pm
Mark, we wouldn't have to tax soda if we made some other adjustments, such as raising taxes on millionaires.

We don't just have to ask ourselves where we are, but how we got to this mess.
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Posted by Frank Cook on January 11, 2009 - 10:39pm
I agree completely. The soda tax seems more social than economic.
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Posted by lazario Ladou on January 11, 2009 - 11:12pm
Taxing soda and chips will not decrease obsesity levels
You'd have to tax sedentary lifestyles
Long distance runners do not eat hamburgers and cheesecake while on the fly
People playing video games and watching TV for hours a day have nothing much going on physically so consuming becomes available to them
When the runners get done running what they eat hardly matters
To end drinking and smoking and drugging and banging and obesity and promiscuity and violence and single motherhood and
you cannot simply tax it to death
You have to find the root causes for such behaviors


When I was growing up -still am slowly day by day- I did not need a commercial to tell me I should play outside for 60 minutes a day
I actually would have been confused why my favorite athlete was telling me 60 minutes was enough
1 hour? I could not be threatened to come inside at dark.

Tax bad parenting. How in the world does one do that
stupid
The soda pop is not enough
but it is such a perfect place to start
And if you're strong enough together we can take the world apart
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Posted by lazario Ladou on January 12, 2009 - 12:12am
refrain from refrains
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Posted by Howard Owens on January 12, 2009 - 7:24am
(if you drive a car) - I'll tax the street;
(if you try to sit) - I'll tax your seat;
(if you get too cold) - I'll tax the heat;
(if you take a walk) - I'll tax your feet.

-- The Beatles, Taxman
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Posted by John Roach on January 12, 2009 - 7:40am
This “soda/pop” tax will not be used to help anyone any more than the cigarette tax does. The State’s record on “dedicated” taxes is very poor. It is just another way to get money for the general fund. Since the middle class is the majority of the voters and an across the board State income tax increase would make them mad, we raise income taxes on the millionaires and other taxes/fees on the rest of us. The extra tax will seem small, a few pennies on a can of soda/pop, a little more for your car, and the like. And some of you will make excuses for it being for the “greater good”. But unless your income goes up more than the total of all the new taxes and fees you pay, at the end of the year you will have less money to spend on good and services that actually create jobs. Do the math.

It will also hurt the poor the most. Remember them. We say it is for their own good, but they are going to continue to buy soda/pop, just like some people still buy cigarettes. But the poor can afford it less. The odd thing is that with more taxes on soda/pop, sooner or later you have less money to buy soda/pop, hurting the stores that sell them.

Rising taxes on the “rich” is always popular. And Dan, you’re right; it will bring in more money. But they can afford to put money in tax free investments or to move their money (or themselves) out of the State. If they do not move their money out of the State, they still have less to spend. And they actually buy stuff like cars and TV’s. They will just buy fewer of them, hurting the ones that make and sell them.

Sad thing is that stupid spending will continue. Governor Patterson’s budget calls for more spending. There are some cuts but most are only cuts are in the rate of increase. If he and the legislature were serious, they would freeze spending at last year’s rate. Then with tax increases, you would see progress.

Here’s an idea for the middle class. Don’t tax interest on regular every day savings accounts. Since you already taxed the money going into the account, maybe people would save more and have more to spend later. This would not be like an IRA that you can’t touch for years. This would be the average savings account. If you’re not careful, you might even really help the poor.
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Posted by Mark Potwora on January 12, 2009 - 10:17am
Whats wrong with cutting spending....do more with less ..we have zero inflation now so shouldn't spending be at the same level as last year...say no to soda tax.....
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Posted by JT Hunt on January 12, 2009 - 2:48pm
every new tax or increase that you folks back home say yes to just paves the way for more to be levied upon the state in the future. do you honestly think that anyone born/raised from Albany south gives a DAMN about WNY? they view you as a bastard step brother/sister. farm/dairy folks. a tax burden. may as well be canadian. where do all the billionaires live? besides our big fish, Tom Golisano, they all live down there. NY used to be the Empire State. all empires fall. they need to change the state motto. ellis island used to unite the whole state. now welfare, drugs and gloom may, but that's about it. party's over, steel mill and factories are gone. baby boomers will be dead soon, maybe last generation of folks who care. i'm 31 and i care, but the computer generation behind me (generation .com?) never saw a flourishing batavia with industry. they have no ideal goal to work towards. things were somewhat viable in the early 80's. when you KNEW who you're neighbors WERE. trash blows in and out of batavia like tumbleweed. the landlords DON'T CARE how the rent money is generated. the big city trash stays until the drugs/dope money runs out. or they get busted. WAKE UP PEOPLE!
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Posted by C. M. Barons on January 15, 2009 - 1:09pm
Virtually everything is a potential target for taxation. The Sin Tax concept has allowed taxation to appear a form of social reform- apply taxes to alcohol, tobacco and other unfavorable indulgences. I suppose it paints tax as a positive effort to tame our vices.
I could care less if the state taxes soft drinks. To make an issue of it elevates soda pop to a stature unworthy of its significance.
The state needs to bolster its coffers and cut its expenses. As usual, the methods for accomplishing those goals is mired in politics. Therefore the outcome will be overly complex, irrational and convoluted. What else is new?
Didn't we just have an election? Oh- that's right. We re-elected the same idiots.
WBTA AM-1490 Batavia, New York

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