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Governor Paterson Not Sweet on Soda: Fat Tax Proposal

December 20, 2008 · 9 comments

Following in the footsteps of Alabama and countries like the UK, the state of New York is considering imposing a so-called “fat tax.” While each municipality is a little different, the New York proposal would slap an 18% tax on sodas and sugar-filled drinks which contain less than 70% real fruit juice.

The official position on the “fat tax” is to discourage consumption of high-caloried drinks. The government projects a 5% drop in the number of sugary drinks that New Yorkers drink.

But you and I know what this is really about: money.

While sin taxes have been imposed or proposed on a number of items that are said to be bad for you – cigarettes, alcohol and in some states, porn – ostensibly to curb the behavior, these taxes have generally not resulted in dramatic changes. Folks still smoke, drink and yep, look at porn.

What Governor Paterson is really hoping to do is close a gaping hole in the budget: according to the Governor, the new tax will raise almost half a billion dollars in 2010-2011. In a tight economy, taxpayers will howl at the idea of raising personal or property taxes. Taxpayers are far less vocal about a tax on items that health officials have already labeled as bad for you.

Not surprisingly, the American Beverage Association opposes the tax, arguing that it doesn’t make sense to target sodas and sugary drinks as a primary cause for obesity. I would actually agree. If you’re going to make a policy statement about health, then make it across the board. Of course, that would never fly. Can you even imagine a surtax on chocolate?

{ 5 comments… read them below or add one }

1 GT December 21, 2008 at 12:14 pm

If this keeps up “Santa Belly” wont shake like a bowl full of jello.

2 RLW December 21, 2008 at 4:34 pm

I don’t think this is how taxes are supposed to be used. Is this not the same as the reason for the Boston TEA Party (Taxation without representation)? How many more things are we going to let law makers tax before we realize, it’s just another TAX. Many of the taxes we pay are disguised as fees, funds, etc. Take our county for example. Flood Fund $47.00+, River Authority $60.00+, Federal Storm Water Fee $13.00+, and that is just the County property tax that I do not remember voting on. We as the People of the United States of America should be allowed to VOTE on any TAX increase, even if they do not call it a TAX.

3 Jim Tressor August 4, 2009 at 1:38 pm

I don’t think a fat tax is very practical – there are several things wrong with Pigouvian taxes in general. They are hard to calculate because it is impossible to determine the exact amount of externality caused, in this case by obesity, and they affect different people in different ways! Here is an article about why a fat tax wouldn’t work:

4 Michael Crist February 28, 2010 at 5:14 pm

The fat tax is so ridiculous. What are they going to tax next. I work for a soda company and I will lose my job along with thousands of other. And why? Oh, because the government needs money and see’s the soda company doing well. I am so scared the faxt tax will pass and I will lose my Job. I actually can’t believe this is happening. The state can’t get money from a tax if there aren’t any soda companies. Many will close. Trust me when I saw that!

5 SimonSays April 7, 2010 at 8:04 pm

So next would be sugar and lemons?
I can buy 5 lbs bag of sugar and few lemons. Combine with the water, it will make perfect refreshing drink full of sugar without tax.

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