I was on the CBC’s The 180 on Sunday, discussing sugar taxes, fat taxes and paternalism. The audio’s at the CBC site.
While lots of people can point to expanding waistlines as something they find undesirable, just not liking how other people look isn’t a sound basis for public policy.
To the extent that costs are borne by the public health system, it’s not even obvious whether sugar-linked obesity increases or decreases overall health care costs: there’s higher cost at every age, but earlier death. Which effect dominates really isn’t clear.
Further, much of the effect is what economists call a transfer. Sure, there will be some effect on total consumption when the cost of the medical bill is externalised, but that’s different from the costs of being unhealthy. Most of the costs of being unhealthy are borne by the person who’s sick. Maybe you’ll consume a bit less exercise and a bit more unhealthy stuff, at the margin, when your health insurance bill doesn’t vary with your decisions, but you still have to live with the consequences. People would take less care when driving if their insurance premiums weren’t affected by the number of speeding tickets they get, but they’d hardly start rolling their cars on purpose.
For the part of the effect that is due to changes in behaviour under a public health system, implementing a full tax-and-subsidy mechanism to make people behave as they would if they were under an insurance system winds up undoing much of the benefit of a public health system: it replicates insurance premiums, but at a higher administrative cost.
Finally, there’s just something wrong with telling people not only that they have to be signed up for a compulsory insurance system that they might not want, but also that because they’re signed up for it, they’re going to be subject to a pile of taxes and subsidies and regulations to make sure that the overall system isn’t too expensive.
And even if all of that could be swept aside, there isn’t particularly good evidence that soda taxes even work. Instead, there’s just substitution over to calories from non-soda drinks. A comprehensive, and very high, sugar tax would change behaviour. Tobacco taxes have reduced smoking considerably. But recall that, at least in New Zealand, you’re paying $0.55 in tax per cigarette. If the average price of a pack of 20 cigarettes is about $17.20, then tax is 63% of the cost of a pack. A comprehensive tax on all sugars that resulted in a $0.50 increase in the cost of a can of Coke might also reduce sugar consumption. There’s no particularly good reason for doing such a thing, or at least not one motivated in things other than your aesthetic preferences over how other people should behave, but that high a tax could have effects.
Paternalistic regulations on consumption are insulting. They’re classist in application. When they’re based on “costs through the public health system”, they are unlimited in potential range. And when they’re packaged up as “let’s tax soda and subsidise healthy foods”, you empower an army of rent-seekers to argue over the edge cases.