NCPA - National Center for Policy Analysis

Governments Consider New Taxes on Soda and Candy

November 8, 2011

Recently, fervor regarding obesity and its negative effects on overall health has spilled over into the political scene as many politicians and some scientists make the case for government intervention to help trim the nation's waistline.  This desire has taken the form of proposals for taxes on fast food, salt and vending machines, as well as outright bans on specific substances such as trans fats.  Some of these measures have been successful, while others have failed, says Scott Drenkard, an analyst with Tax Foundation.

  • While the incidence of obesity in adults jumped from 13 percent to 34 percent between 1962 and 2008, it has since leveled off.
  • Seventeen states tax candy at a higher rate than other groceries, and four states collect an excise tax on soda.
  • In 2011, 14 states proposed new soda taxes (in some cases, raising product prices by as much as 264 percent), and two states proposed new candy taxes.
  • Between 1998 and 2010, soda consumption per capita fell by 16 percent.

One of the major difficulties in creating legislation that addresses obesity is measuring obesity with a reliable metric.  One of the most common is the Body Mass Index (BMI).  Invented in 1835, the BMI incorporates only a person's height and weight.  It then compares that individual's weight with what its standard tables say is a normal weight for a person of that height.  The difficulty is that the BMI fails to distinguish between muscle mass and fat, meaning that many people who are muscular and fit would nonetheless be measured as overweight or obese.

Another problem with these kinds of tax policies is establishing definitively what candy and soda are.  Though efforts have been made to create uniform, nationwide definitions, these efforts typically yield multipage documents that leave the tax code a great deal more complicated than it was before.  Simultaneously, candies and sodas alike manage to avoid taxes by having special combinations of ingredients that exempt them, while other foods that are not typically considered to be candy are caught in the tax net anyway.

Source: Scott Drenkard, "Overreaching on Obesity: Governments Consider New Taxes on Soda and Candy," Tax Foundation, October 31, 2011.

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