Sin taxes

What governments and trial lawyers did to the tobacco industry, could soon be the fate of the food and beverage industry, warns Robert Sirico, president and co-founder of the Acton Institute.

The federal government, Sirico believes, is renewing efforts to change American consumption habits by adding new “sin” taxes on a whole host of products.

“Dramatically expanding the reach of the federal government by adding new ‘universal’ entitlements, while at the same time pretending to manage the economy out of the pit of a severe economic downturn, is no mean feat. Which is why the sin tax, an excise tax on those goods that elected officials deem morally suspect, has come roaring back,” Sirico noted in this post at The American.

He said the renewed effort started in early May when the Senate Finance Committee considered one way of paying for President Barack Obama’s health care reform by placing an excise tax on sugar-sweetened beverages for the first time, and imposing a uniform tax across wine, beer, and liquor, which are now taxed at different levels. According to the Congressional Budget Office, a tax of 3 cents per 12-ounce serving of soft drink would generate $24 billion over four years.

Sirico makes the following points in his assertion that such taxes are bad public policy:

• The elite media, liberal think tanks, and academic researchers are building a case against Big Food for its scarlet sins: sweetened drinks, fatty snacks, alcoholic beverages. You know what’s coming next: a wave of punitive government regulation and scores of lawsuits aiming to shake down the nation’s vast food and beverage industry. It’s the same strategy developed for the assault on the tobacco industry—tax the bad stuff out of existence.

• The New Puritans who are ready to dramatically expand the welfare state and limit personal freedoms claim to know what’s best for you.

• The evidence that sin taxes are a failed policy approach is incontrovertible, according to this report from the Mercatus Center at George Mason University. The bottom line, say researchers Richard Williams and Katelyn Christ, is that a convincing body of evidence tells us that boosting food and drink prices “is not sufficient to make ‘fat taxes’ a viable tool to lower obesity.” That’s because soft drinks are really a small portion of most people’s diets.

• The Mercatus report also points to something that all taxpayers should be aware of: secretive revenue shifting by those levying the tax. Williams and Christ point to an Arkansas soft drink tax passed in 1992 that was supposed to pour money into the state’s Medicaid program. However, when there was an attempt to repeal the tax, taxpayers discovered that policy makers were diverting the revenue to the general fund. It happens time and again.

• “The Perils of Ignoring History: Big Tobacco Played Dirty and Millions Died. How Similar is Big Food,” a report by researchers Kelly D. Brownell and Kenneth E. Warner is part of the effort to demonize the food and beverage industry. Brownell and Warner accept that personal responsibility and freedom are values cherished by Americans, but “they obscure the reality that some of the most significant health advances have been made by population-based public health approaches in which the overall welfare of the citizenry trumps certain individual or industry freedoms.” In other words, the government knows better than you do how to feed and raise your children.

• Who, or what exactly, is Big Food? Brownell and Warner observe that, unlike the tobacco industry, the food industry is larger and more fragmented. If you are a trial lawyer looking for new and bountiful vistas of tort action, Big Food must look extremely tempting: The industry is diverse and fragmented in some ways, counting as its players a local baker making bread for a few stores; a family running a convenience store; an organic farmer; mega companies like Kraft, McDonalds, and Coca-Cola; and even Girl Scouts selling cookies. The same company making fried foods laden with saturated fat might also sell whole-grain cereal.

• It must be noted that there is a certain irony in the fact that some of the very advocates of sin taxes are those often heard, in other contexts, making comparisons between religious conservatives and the Taliban while insisting that the government “keep your laws off our bodies.”

• When it comes to public policy, the preferred method of discouraging sin should fall under the category of alternative, mediating institutions, notably family, church, and school. That would leave government officials more time to focus on the sins they can really do something about—their own.