As an economist, I have two big gripes with such paternalistic public-health initiatives: The proposals aren’t grounded in data or compelling economic models, and soda taxes might catalyze a dismal chain reaction, with escalating government intrusions on personal freedom…
Pressing ahead with soda taxes that don’t work can have serious consequences. When new taxes are imposed and escalated with no measurable impact or end in sight, consumers know that the tax is nonsense. The next time there’s a public-health campaign that might be worthwhile—perhaps one that would keep these individuals out of the hospital—they’re resistant. In effect, they’ve been inoculated against messages that might matter.
Public cynicism deepens further when taxpayers see what becomes of the revenues earned by lifestyle taxes. Last year, an organization called Campaign for Tobacco-Free Kids ran the numbers on 14 years of tobacco-related taxes. The report estimates that, in fiscal year 2013, states will collect a record $25.7 billion in revenue from the 1998 tobacco settlement and tobacco taxes. But states are expected to pay less than 2% of it on tobacco-smoking prevention and cessation—even though the 1998 settlement was sold to fund such programs. People notice when promises go unfulfilled and tax revenues are diverted from their intended purposes
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