Don’t Tax Our Drinks

It’s a debate that’s been a part of political discussion since the Magna Carta in 1217. A debate about the role of government in our everyday lives – how much say, if any, the government has over our individual rights and liberties. Essentially, it’s Big Government vs Limited Government. Most people would agree there needs to be some form of government: there needs to be rules (laws) to stop people stealing each other’s stuff and being bastards. But above that, there’s an awful lot of debate.

Libertarians like The Cato Institute, or conservatives like the US Republican Party and the Australian Liberal Party advocate for a small, limited government. It is not up to government, they say, to intrude upon how we as individuals run our lives. That notion is anathema to the Free Market principles they champion. As a result, they almost invariably call for low taxation: after all, it’s our money to do with as we please, not the government’s.

The opposing view, taken by progressives like the Australian Labour Party and the US Democratic Party, is that government can do some things better than individuals or private enterprise. That there are some things a government has to do, to provide for citizens who cannot afford it: public education, health and transport for example. These are all expensive services, so advocates of bigger government are usually calling for higher taxes to pay for them.

I should at this point make clear I am speaking principally about fiscal policy, not social policy. Politicians of all sides of the spectrum tend to be only too happy to dictate moral choices, such as abortion or same-sex marriage.

But this, like most debates of political position, is a shallow debate. To break the government of an entire country down to two schools of thought is simplistic and unworkable. Not everything in politics is Big Government vs Small Government, or Left Wing vs Right Wing. Labor or Liberal. It’s not one or the other, because we don’t live in a binary world. We need some Big Government ideas, such as a minimum level safety blanket: healthcare, housing, food. But need room for entrepreneurialism, capitalistic incentive and free markets. As with most things, it’s a matter of balance. And it’s a debate which needs to be applied on an individual case-by-case basis.

Take, for example, the debate taking place right now in the US and other countries about taxes on fast food and soft drink. Thirty-three US States have a ‘soda tax’ aimed and curbing the consumption of high-sugar drinks, and a number of lobby groups are campaigning for taxes on high-fat foods such as pizzas and burgers. The taxes are designed to reduced the level of obesity and related health effects. That’s the Big Government view: individuals need help But it’s not up to the government to decide what we, as citizens, should eat. That’s an individual choice, a decision we can make for ourselves.

Aside from animal-welfare or environmental concerns – which are an altogether different debate – if I eat a burger, the only person I’m possibly doing harm to is myself. Nobody else suffers from my eating habits. To tax junk food, therefore, serves only two purposes: to dissuade people from eating it, or to raise money. If it’s to raise money, it’s a sneaky, nasty way to do it that opens the door to other taxes and levies on our lifestyle. If it’s to manipulate our eating habits, it’s an affront to the ideals of liberty and personal choice.

Similarly, in today’s The Age, health experts are calling for a tax on “energy drinks” – drinks laden with sugar and caffeine and various other stimulants. On the surface of it, this is the same sort of debate as the junk food or soda tax: we can decide for ourselves if we want to drink them or not. The problem in this case, however, comes from the increased health risks from high-caffeine drinks – especially to teenagers. And teenagers, with less developed frontal lobes (responsible for forethought and impulse control) are less equipped to make considered judgement calls on how much is too much. But how high would the tax have to be, to deter teenagers? Dramatically high, I think. So much so that you wouldn’t just be inconveniencing teenagers, but sensible adults as well. Perhaps a restriction on sale to under-18s should be looked at.

As with most things in life, moderation is key. We do not need a Big Brother government that will dictate what we can and can’t eat or drink. But we need some form of regulation to look after those whom the free market fails, and we need better education and critical thinking skills to enable people to make smart, informed choices.

7 thoughts on “Don’t Tax Our Drinks

  1. I guess the one flaw in the argument you make here, is that health problems do carry a financial cost to the state in the long term. I mean if you do eat enough burgers for it to negatively impact your health (please don’t, by the way!), well I’m sure you’d still like that Medicare funded bypass operation… Right?And – to put it on a macro scale – if a population increases its ‘risk factors’ for chronic health issues, well the bills still got to be paid. And the money’s got to come from some where. Some parallels are with obesity:http://www.health.gov.au/internet/main/publishing.nsf/content/health-pubhlth-strateg-hlthwt-obesity.htm#economicOr smoking – the classic example:http://www.tobaccoinaustralia.org.au/chapter-17-economics/17-3-the-costs-of-smoking-to-australian-societyBut you’re right, balance is needed, and taxation is certainly not an ideal way to create cultural change. I think that regulations such as the recent initiative by the Brumby Government requiring fast food outlets to display calorie information are a more positive way of changing peoples habits. Looking forward to seeing if it makes any impact… Here’s hoping.In the meantime, I agree, don’t tax soft-drinks, unless you’re using that money to fund a ‘Denticare’ scheme…

  2. The long-term costs to the taxpayer of lifestyle-related health problems – I was wondering if anyone would bring up!It’s a good point, but largely unworkable in the end, I think. For starters, to link burgers with smoking is a false analogy – every cigarette is doing you damage, yet obesity is caused by a caloric imbalance. It’s not the burgers themselves that give you the heart attack, it’s the lack of exercise offsetting that.If you eat junk food every day but workout like an Olympian, why should you still pay extra tax on that junk food? You’re still being responsible with your health, and pose no extra burden on the health system.I’m deliberately ignoring things like the heath effects of salt, for example, because this is a broader discussion. Plus, it’s almost impossible to avoid salt when eating out these days and a Pigovian tax requires choice and alternatives.Yes, we need to be sure healthcare is adequately funded. If you have a heart attack – whether from smoking, obesity or just darn luck – you should expect the best treatment possible. To deny treatment based on past (or even present) lifestyle choices is inhumane and reprehensible.

  3. Quoting post!:"If you eat junk food every day but workout like an Olympian…"Because you might be working out like an Olympic pistol shooter for all I know. :P. Or you might, you know, have to work for a living. Not to mention the host of other health risks you’re exposing yourself to over and above obesity, which you allude to but ignore. I think such problems still cost money and tie up health resources in treating them. I mean, I don’t know, I’m not a doctor. Maybe our Olympians treatment for diabetes and high blood pressure magically pays for itself because they’re skinny…. So yes, it’s probably easier for your body to get over a burger than a cigarette, yes, but they still create problems. At least you can’t "passively eat" it…."why should you still pay extra tax on that junk food? "Well, the key question from my earlier post still stands, where does the extra money come from to fund increased national health costs that are arising? Current estimates say health spending will rise from 4% of GDP to 7.1% of GDP by 2050 . Mostly due to rising rates of chronic disease and the aging population. The tax base will almost certainly have to be deepened – because our aging population is going to narrow. So unfortunately we’re all going to end up paying for it, whether we train like an Olympian or not.But, again, I’m not in favour of direct measures like a straight out tax on the retail price of junk food at this stage – well not beyond what exists already (GST anyone?). I’d prefer the government to use its regulatory powers to give people a better idea of what they are eating. It seems to have worked elsewhere… . Especially when it helps reveal hidden offenders .Thing is though, if it doesn’t work the government will have to come up with something else.

  4. Yes, with an aging, sedentary population comes increased healthcare costs. How to pay for that? I think the staggered income tax model we’ve always used is the best resource, but I think it needs to be revised and tweaked. I also don’t have a problem with a GST – provided (as is the case) that some basic essentials are exempt. And yes I think some things that aren’t exempt, should be (such as tampons).The usual arguments against taxing the rich are that it is the rich that create jobs, so penalising them with higher taxes will hurt the economy. I disagree with that – companies create jobs, not individuals. A higher income tax won’t affect businesses, just the people who work in them. I’m not calling for a “level playing field”, just a more balanced, fairer field.So that’s revenue increasing, there’s also room for reducing expenditure. I’d like to see less money spent on “sporting” events that are more entertainment events – lobbying for the World Cup, or sports stars to play in Australian tournaments seems like an expensive waste of time to me. They don’t encourage people to be more active, they encourage people to watch them on TV or the grandstand. There’s plenty of other areas the government spends money it doesn’t have (don’t get me started on offshore processing of refugees) and I really think we need to stop and refocus our priorities. Someone to get into power and suspend everything not absolutely necessary, and then fix the health system, the education system and then get an appropriate before seeing what money’s left for less important stuff.As for signs and and advertising showing the caloric count of junk food, that’s great – but seriously, does anybody not realise it’s high in calories? Is anybody going “I’ll just have a light lunch, just a double bacon burger with large fries”.That said, I’m not against the idea – anything to help people make informed decisions is a worthy cause – I’m just not confident of it having much effect.

  5. I agree, it’s a matter of wait and see…. But a similar regime does appear to have had some effect in New York…. We’ll see if Victorians respond the same way…. I’m ever the optimist!And I think one of the links I posted there showed that some of the big offenders on the high calorie list that the government’s really targeting with this initiative aren’t necessarily your Whoppers and Big Macs, but more products with names like:"Garden goodness vege burger with herb mayo" (Grill’d) – 2240 kilojoules.Or:"Green Tea Cream Venti" (Starbucks) 2363 kilojoules (and yes, it’s a freakin’ DRINK…. man… we’re all screwed).Both of these examples have a higher calorific content than the good old yardstick, the Big Mac.And not far behind we have:"Blueberry Blast low fat smoothie" original size (Boost Juice) – 1995 kilojoules (emphasis mine)Hell, maybe we just need a revolution….Oh, and I did want to just throw in a link to these kind folk, simply because I think they are awesome. And because they still give me hope…

  6. They’re some great examples, Seamus. And as I said I’m not against the idea. I just don’t like that fast food outlets are being singled out. As you say, it’s not necessarily Big Macs and Whoppers. So when I go to my local Indian restaurant, I’d like the menu to say that the butter chicken has 1,880 kilojoules, but the tandoori chicken has only 1,000.But then we’d get the "small restaurants can’t afford to reprint their menus" outcry, and possibly some confusion as to who tests the food.Like so many things, obesity is a multi-faceted problem that needs to be handled in its entirety.

  7. Oh, I have no issue with making small restaurants do it to. Screw ’em. At our local Indian, reprinting those menus won’t break the bank….I read a comment on this somewhere saying "I want to see The Flower Drum have to list calorie content on their menu!" And I’m all for it!It’s actually not that hard to work out a rough idea of what the calorific content of a food is, there aren’t many cooking processes that alter it one way or the other – it’s simple: If the ingredients contain x calories before they are cooked, odds are the food contains x calories after it’s cooked.Now the hard thing is working out what to do about cooking oil, but it’d be pretty simple to produce a guide on how to calculate what the various process (pan fry, deep fry, grill etc…) with various oils (olive, peanut, palm, coconut, butter et…) "add" to food.You’d just roll testing of menu claims into the current health inspection regime, and huzzah!…

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