Should We Start Taxing Soda Like We Tax Tobacco?

In one of the most comprehensive studies of its kind, new research is raising some big questions about how taxing sugary beverages could help curb obesity rates.

According to the study, the average sales tax on soft drinks today (among states that even have sales tax) is about 5%. By contrast, the average combined federal and state tax on a pack of cigarettes amounts to 44% of its cost. Economic research has confirmed that taxes on cigarettes do reduce smoking; by one estimate raising the price of a pack of cigarettes by 10% cuts smoking rates by about 6%. By creating a similar tax on sodas (regardless of the size of the drink), people would likely switch to healthier beverages, and even lose some weight in the process.

While some public interest groups have proposed similar tax hikes on sodas, and cities and states throughout America have attempted to create a tax via legislation or ballot initiative, so far, no such rules have been enacted. Perhaps this study will shed light on the debate. It was funded by the Robert Wood Johnson Foundation and the National Institute for Health and published in the American Journal Of Agricultural Economics, and comes amid growing concern over continued high rates of obesity in the country, which was about 36% for adults and 17% for adolescents between 2009 and 2010. The medical costs relating to obesity are said to top $147 billion a year.

We'll drink to an effective soda tax!

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