What Would a Soda Tax Mean for Missouri?
Twenty two states have already enacted selective taxes on soda. In two of these states, Virginia and Illinois, this tax is in addition to the general food tax.
Missouri doesn’t have a soda tax yet. We Missourians are fortunate to enjoy some of the most permissive sin tax policies, compared to other states. For example, Missouri has the second lowest state cigarette tax — it’s $0.17 per pack, compared to a national average of $1.30. Additionally, Missouri is tied with my home state, Wisconsin, for the second-lowest state beer tax — $0.06 per gallon, compared to to a national average of $0.28.
According to this revenue calculator for soft drink taxes from the Rudd Center for Food Policy and Obesity at Yale University, if Missouri slapped a $0.01 tax on sugar-sweetened beverages, the state would generate more than $285 million in 2010 alone. If this $0.01 tax were expanded to include diet beverages, this number would balloon to more than $460 million.
How high does the tax have to rise in order for consumers to be responsive (i.e., drink less soda)? Is the government legitimately trying to change consumers’ behavior, or is it simply trying to raise extra tax revenue?
I’d like to offer a point of clarification.
In the revenue calculator for soft drink taxes, the unit of taxation is cents per ounce. Therefore, in the scenario that I described, a can of soda would be taxed $0.12 and a 12-pack of soda would be $1.44.
This leads me to believe that consumers would be more responsive than I implied in my last paragraph.
Comment by Christine Harbin — September 24, 2009 @ 12:01 p.m.
The soda tax is a terrible idea. Sales taxes in general are less burdensome than other forms of taxation, but targeting specific products for economic or moral reasons is really bad practice.
Comment by Josh Smith — September 25, 2009 @ 11:05 a.m.
That’s nearly half the price I pay for soda at Costco. You bet I would decrease my consumption, but that would depend on if the government saw fit to tax soda’s substitutes in a similar manner.
How would they treat flavored water or Gatorade?
Comment by Tony — October 7, 2009 @ 11:37 p.m.
Thanks for the comments, Josh and Tony.
I’ve heard of several different proposals. Some include diet sodas, others exempt them. It would seem to to me that energy drinks like Gatorade and Redbull would be prime targets for the tax. Whatever the government thinks is good for us, apparently.
Yesterday, the WSJ published an op-ed by the CEO of Coca-Cola. I like his argument that government should encourage healthy lifestyle habits instead of demonizing industries.
Here’s the link: http://online.wsj.com/article/SB10001424052748703298004574455464120581696.html
Comment by Christine Harbin — October 8, 2009 @ 5:15 p.m.
[...] taxes would easily generate a considerable amount of income for state and local governments. In a previous post on Show Me Daily, I used a revenue calculator for soft drink taxes from the Rudd Center for Food [...]
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