Obesity Taxes in the U.S.: Will RI Follow Suit?
Monday, November 28, 2011
As several states continue to push for additional taxes for items like soda and candy, a new study finds that while enacting such taxes will have little impact on obesity rates and health outcomes, they will create a complex and confusing classification system to divide the "good" food and drink products from the allegedly "bad" ones.
The study, conducted by the Tax Foundation, found that 17 states now tax candy at a higher rate than other groceries, while four states collect a special excise tax on soda. In 2011, fourteen more states, including Rhode Island, proposed new soda taxes and two states proposed new candy taxes.
The tax in the Ocean State, sponsored by House Judiciary chairperson Edith Ajello, was not supported by the General Assembly, which also killed Governor Lincoln Chafee’s proposal to broaden the state sales tax while lowering the rate to align with other New England states.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTRhode Island already has the highest sales tax of any state in New England.
RI Proposal Would Have added 1-Cent Per Ounce Tax
While some of the soda tax proposals would have raised prices as much as 264%, Rhode Island was seeking to add a 1-cent per ounce excise tax on sugar-sweetened beverages. The taxes are often referred to as “obesity taxes” because the argument politicians often make when proposing such taxes is that they are looking out for the health of constituents.
But Tax Foundation analyst Scott Drenkard found that the problems with obesity taxes outweight the positives.
"While reducing obesity-related health problems is a worthy goal, adding an additional tax burden to particular food and beverage categories is a clumsy and inefficient strategy," Drenkard said. "Obesity taxes fall on all consumers, including those who consume candy and soda in moderation and have no weight-related health issues."
Analyst: Consumers Should Make Prudent Decisions
According to the Tax Foundation, studies suggest that even when selective taxes on certain food products do cause individuals to consume less, those same individuals replace the calories avoided with other foods, resulting in no net decrease in caloric intake.
In addition to questions about the effectiveness of reducing obesity rates, the systems already in place for taxing candy and soda illustrate the unexpected difficulties in deciding what does and what does not count as candy and even soda. Chocolate bars that include any kind of flour, for example, generally do not meet the legal definition of candy. In the case of soda, some states exempt beverages with as little as 10% fruit juice, while in Tennessee, Oregon and Texas, drinks must be 100% juice to be exempt.
"The solution to the obesity problem will not come from government authorities picking out a handful of products to saddle with extra taxes," Drenkard said. "Consumers need to be free to make prudent decisions about their own diets and health needs without lawmakers trying to stack the deck in one direction or another."
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