More on Soda Taxes

The Huffington Post just ran a piece I wrote in response to prior post in the same outlet by a doctor advocating for soda taxes.  Here are some excerpts: 

Jeff Ritterman, Vice Present of the Board of Directors for his local chapter of the Physicians for Social Responsibility recently wrote on The Huffington Post that we should "Tax a Cola, Save the Planet."

I've read lots of editorials advocating soda taxes, but this one beats them all in promising what a soda tax will deliver. He argues that:

"A simple policy change like the Soda Tax can help us waste less water, lower our GHG production, and lessen the pollution of our air, water and soil. At the same time, it can fund vital programs in our schools, parks and neighborhoods to improve nutrition and physical education opportunities for our children. It's a win-win-win: a win for the environment, a win for our children, and a win for our communities."

Wow, one tax will do all that! H.L. Mencken reportedly said that "for every complex problem there is an answer that is clear, simple, and wrong."

After discussing the literature showing how price changes and soda taxes cause people substitute toward other beverages and foods, I argued:

Ritterman argues that a soda tax will results in less soda being consumed, and he's probably right. But does that mean that there will be less water and less aluminum consumed? Well, it depends what consumers drink and eat instead of soda. If people instead drink more milk or more beer, as previous studies have suggested, will water consumption really be cut? If more cows are needed to produce more milk due to the increased demand caused by soda taxes, will greenhouse gases really fall?

Ritterman is right to suggest that enacting a soda tax can raise revenue for the government. But, that hardly makes it an economically efficient thing do. A tax is akin to reducing in one's income. No one likes having less income. Using taxes to direct people to buy goods they didn't purchase before the tax cannot make people better off.