Will Federal Labeling Requirements Spur New Taxes?

130501_SUG_ColaDrinkThe Obama administration’s hunger for big government may be insatiable, because now it wants to limit our own appetite. Having taken control of healthcare, it is setting the stage for another intrusive step into our lives that will further limit our freedoms – this time in what we eat.

The Food and Drug Administration’s recently released health and fitness regulations call for all food labels to prominently display any use of added sugars. Though it might seem innocuous, or even helpful, such an explicit step will egg on state and local governments looking to curb food and beverage consumption through the tax code.

Illinois and California have already proposed putting their citizens on the IRS diet, proposing taxes on sodas and other soft drinks. This follows similar attempts in recent years from states including New York and Washington, and cities including Richmond, California and Telluride, Colorado. Such proposals have been consistently voted down over the past few years (even by very liberal cities) – but self-anointed bureaucratic protectors of human health rarely respond to democracy.

Plugging leaky state finances is just an added benefit for these government bullies. Illinois’ recent proposal expects to rake in more than $600 million a year to fund its already bloated public sector. State Data Lab ranks Illinois as a Sinkhole State, one of the five worst states in its per-taxpayer burden for the last four years. If anyone should go on a diet, it should be the Illinois government.

If we actually look at the facts and what experts say, rather than self-interested bureaucrats, we’d see that a soda tax is not only intrusive but also ineffective. Only 7 percent of calories consumed by Americans comes from soft drinks, according to the National Cancer Institute, compared to 11 percent from sweets and desserts. Will the food police be coming after our pecan pie and ice cream next? (Sadly the answer is probably “yes.”)

Further, research out of Cornell shows that a soda tax simply results in substitution to other forms of consumption, like alcohol. Researchers found that beer consumption increased to 172.4 ounces per month when a ten percent tax was applied to soda, increasing caloric intake by 1,930 calories in the same time frame. Oops.

Research also shows that soda taxes have a disproportionately negative impact on the poor, who have fewer resources to fund the government’s expensive cravings and enjoy beverages as an affordable pleasure. But government bullies have never been assuaged by the plight of the little guy – certainly not the Obama administration.

The Illinois bill (and most propositions like it) calls for a one-cent per ounce tax on sugary drinks meaning that a standard 12 pack of sodas would be slapped for an extra $1.44. This is on top of the 6.25 percent sales tax soda already incurs in Illinois – compared to the 1 percent tax for “qualifying food and drugs.” And in Chicago, a further 3 percent tax is issued for soda sold at retail. This means that sugary drinks could soon be taxed three times, cumulatively at a rate over 20 percent. If that’s enough to drive you to drink, you’ll be happy to know that that’s almost $1 per gallon higher than the state’s beer tax.

Get ready for many more instances of such government overreach in the form soda taxes with Obama’s new labeling requirements that beg state and local government bullies to go after sugar and our consumer freedom. Beyond taxes designed to “nudge” Americans away from making choices, there are even more draconian ideas being thrown about, from a California proposal to slap a warning label on soft drinks to one researcher’s call to control sugar like we do alcohol.

 

 

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