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Can Taxes on Sugary Drinks Cut Down on Obesity? Fat Chance

By: Contributor - Nov 19, 2015, 1:04 pm
Taxing high-calorie foods does not guarantee a drop in their consumption, much less in obesity.
Taxing high-calorie foods does not guarantee a drop in their consumption, much less in obesity. (Marjan Lazarevski)

EspañolBy René Sandoval

On September 7, 2015, Colombian legislators Claudia López, Angélica Lozano, and María Fernanda Rojas led a public hearing in Congress to discuss policy changes to address the obesity epidemic in Colombia.

According to the congresswomen, 17 percent of Colombians are obese, and 50 percent are overweight. These are two key precursors to the development of cardiovascular diseases, which are the leading cause of death in the country.

To get the situation under control, these legislators propose setting a 20 percent value-added tax (VAT) on all sugary drinks sold in the country, among other measures that are no less controversial.

It is generally accepted that increasing the price of a product leads to a decrease in its consumption. Therefore, if we know that a certain food item causes obesity, it would be reasonable to assume that increasing the price of that product will lead to a decrease in obesity rates.

However, it doesn’t always work that way, and this isn’t the only factor to consider when implementing such policies.

The first thing we should ask is: what is the objective of this tax? According to the congresswomen, there are two possible answers:

First, they argue that this tax will reduce both the obesity rate and the deaths caused by cardiovascular disease. Second, they claim that the tax will raise more money to fund programs that promote good health and disease prevention.

Again, both assumptions are wrong.

First, eating a particular type of food does not cause obesity. People become obese by consuming more calories than they burn on a daily basis. It is a calorie surplus which causes obesity, not eating a certain kind of food in and of itself.

At the same time, studies suggest that even the most aggressive taxes on sugary drinks (between 10 and 20 percent) have a marginal impact on a person’s total calorie intake.

Consumers will look to replace these sugary soft drinks that are being taxed with other similar products that contain a comparable amount of calories, such as powdered drinks, juices, and so on.

Furthermore, the tax that these congresswomen propose would be quite a regressive measure, since those who typically consume more sugary drinks, such as soda, tend to be of the lowest income quintile. This means that the money to fund these programs would be taken from the pockets of the poor, not the rich.

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What’s more, these legislators are clearly not taking into account that if the sales of these products are negatively affected, then this could have an adverse impact on both direct and indirect employment in this sector.

Ironically, the position that these legislators take implies that they believe that people, especially the poor, act as rational agents. However, they do not take the same position when it comes to other issues, such as obligatory contributions to social security, health, and pension funds, or the mandatory use of seat belts, among others.

This situations reminds me of something Ludwig Von Mises wrote in his essay The Anticapitalistic Mentality:

To establish these facts does not amount to a justification of the individual’s freedom from the point of view of any absolute standards or metaphysical notions. It does not express any judgment on the fashionable doctrines of the advocates of totalitarianism, whether “right” or “left.” It does not deal with their assertion that the masses are too stupid and ignorant to know what would serve best their “true” needs and interests and badly need a guardian, the government, lest they hurt themselves.

It would be interesting if politicians could stop thinking about solutions to problems in terms of more prohibitions and/or regulations, transfering the little amount of freedom we still have to the omnipotent, paternalistic state we have created to — presumably — take care of ourselves.

René Sandoval is an anthropologist at the University of the Andes, where he is currently pursuing a masters degree in public policy. Follow @renesandovalram.

Translated by Rebeca Morla.