Earlier this year we discussed the state's role in externality management. Akin to a carbon tax, a tax on sugar seeks to make the private costs more equal to the social costs. Places in England, Mexico, and California have already implemented these taxes in response to obesity/diabetes. People who consume excessive amounts of sugary soda drinks often end up being diabetic or obese which warrants tremendous increases in healthcare costs.
Do you see this and other disincentivising taxes as a valid way to curb externalities or do they represent an overly controlling "nanny state"? What about offering incentives for proper behavior rather than disincentivising undesirable behavior?
http://www.economist.com/blogs/freeexchange/2015/12/money-talks
11 comments:
I can understand the reasoning behind these kind of taxes, to encourage certain behavior, but I do think that the government is quickly approaching a line that really limits a person's freedom of choice. It is up to the individual to make their own choices regarding health. If they gain the greatest utility from drinking sugary drinks instead of carrot juice, then they shouldn't be penalized for that choice by having to pay more. Though there is the negative externality of the possibility of higher healthcare costs, which is still no reason to infringe on a person’s personal choices as long as they are endangering no other person. If the government really feels the need to butt in, then possibly offering more affordable memberships to local gyms where obesity is more prevalent. Something of that nature would be more beneficial.
I can see the reasoning behind this decision by the various governments by creating an incentive for people to make healthier choices. Ultimately by creating higher taxes on unhealthy items, it's intention is to have people substitute the sugary drink for a water, perhaps. By creating a healthier society you ultimately decrease the exhaustion on the healthcare costs, and in nations where healthcare is paid for by tax payers, I certainly wouldn't want my tax dollars going toward treating someone because they decided to practice poor health. What would be nice is if these governments took the new tax on these drinks and created a fund to assists in healthcare associated with diabetes, obesity, etc.
I do think the initial tax on sugar is a good first step in disincentivizing the purchase and consumption of sugary foods and drinks. People who can't live without the sugar will end up paying the extra price to satisfy their sweet tooth, but other consumers who have a stricter budget or are more blasé about their sugar consumption may cut back. Further, I think it would be a good idea to offer certain incentives for healthy behavior in addition to the tax. Perhaps there could be programs in which fitness classes are offered for a low price with a free trial, etc. Therefore, tax dollars could contribute to something that everyone could participate in; not just unhealthy or obese individuals.
I do think a tax would be effective- up to a certain point. If people want their sugar, they will be willing to spend the money to get it. However, like many of you said, if people don't have the money, they won't spend it. Instead, it might be a luxury good. But I'm not sure if it would solve the public health crisis.
I completely agree with all of the comments above. I think that a tax on sugar would help to disincentivize the purchase and consumption of sugary foods and drinks tremendously. As Emily said, those who feel they cannot live without their sugary foods and beverages will find a way to purchase the goods. They will make lifestyle changes to accommodate this. Take for example cigarettes. There is a tax on cigarettes to disincentivize consumers from purchasing a potentially life threatening item - but people still find the funds to purchase cigarettes.
With this new tax, those will still want the sugary beverages and food item will find the money to do so. All the while, the government will be able to collect more in revenue from these items. So, ultimately, what is the harm in this sugar tax? It will disincentivize people from purchasing the items while allowing the government to gain a few extra bucks on the sale and consumption of these goods. What truly is the harm in that?
So they are treating this basically as a sin tax? Sugar is a source of bad eating habits, but not all of it. Are countries doing to start taxing sodium and fats? Goods with sugar can be good in moderation. I can see the other side of this which is people having these foods less, and only in special occasions or reward situations. One thing I've always had a problem with is how healthy foods are more expensive then unhealthy food. Maybe these proposals will change that and incentivize people to eat healthier. Or it'll make them work harder to earn more money to eat the food that they want to eat.
I understand the reasoning for wanting to disincentivize consumers because it will increase obesity diabetes and healthcare costs. Depending on how high the tax is will show the effect on the economy. I think the government could provide incentive for better health choices instead of disincentivizing poor behavior. This would send a more positive message to decrease health problems and healthcare costs.
I think Cooper's idea relating to creating a fund from the taxes is a fantastic idea. In response to Rachel's thoughts, I would say that putting a tax on sugar isn't limiting anyone's "freedom of choice." This is because if you really desire something you should have near inelastic demand and would be willing to pay the extra tax. There is a tax on cigarettes and alcohol, a large one, and I wouldn't say this defers anyone from purchasing these products is. Granted, these products are addictive, but sugar can also be something that is craved dramatically. I shouldn't have to pay higher healthcare costs because "John Doe" can't take care of his own body.
I absolutely agree with the government implementing a tax on sugar. The big food companies have been lobbying for years which has allowed them to continue to create and serve their products to consumers. It seems like Americans are unable to make the right decisions on their own so there needs to be some incentive to create a healthier country.
I think it is acceptable for a consumer since the sugar price will not be high anyway and each family will not consume that much sugar each month. Also I do not think it will hurt sugar industry because sugar for each family is rigid demand. The increasing of price will not reduce the demand that much.
I think it is a good policy to give people incentives to consume less sugar and be healthy. It also prevents food and drink companies from using too much sugar in the products which hurt consumers' health overall.
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