Friday, February 3, 2012

Using taxation to address negative externality — sugar


Sugar should be identified alongside alcohol and tobacco as a health danger, and governments should tax sweetened drinks and food as part of their efforts to combat it.
So says a commentary, published on Thursday in the journal Nature as part of a widening debate among doctors and policymakers about food fiscality and health.
Around 35 million people die each year of non-communicable diseases such as heart disease, cancer and diabetes and a wave of obesity is unfurling from rich countries to developing economies, say three US academics who authored the piece.
Tobacco and alcohol are already regulated by governments to protect public health, “but one of the primary culprits behind this worldwide health crisis (is) unchecked,” they say.
A levy on added sugars would help meet the growing costs of meeting sugar-related health problems and discourage consumption, they suggest.
Read the rest at Raw Story
Time to tax sugar to combat health crisis: experts
by Agence France-Presse

9 comments:

Ryan Harris said...

This crosses the line on pursuit of happiness and liberty. The spirit of the old declaration is gone.

Matt Franko said...

Right all of the obese Libertarians are going to freak out over this! ;)

Tom Hickey said...

Negative externality is a major policy contention, but the economics is clear on this. Negative externality introduces inefficiency, and inefficiency imposes a cost. If no policy means are put in place to address the cost, then society bears the cost quantitatively and qualitatively rather than those directly involved in creating the inefficiency. This means that those that are responsible for the negative externality are receiving a public subsidy, which is an incentive to maintain and increase the negative behavior. Taxes are disincentives and and regulations act as prohibitions.

Negative externalities are one of the greatest weaknesses in the argument for "free markets." A publicly subsidized market is anything but free. Unless "free markets" really means free lunch for participants at public cost.

geerussell said...

I'd start by eliminating corn subsidies rather than taxing sugar and see where that got me. People who prepare their own food generally eat a lot healthier than those who rely on pre-packaged food. Sugar is what's used in home preparation, HFCS is an input only at the industrial level.

It's not even just that HFCS used as a cheaper substitute for cane sugar for industrial food, it is so cheap that even foods which would otherwise contain little or no sugar are loaded up with HFCS because sweetness sells.

Ryan Harris said...

So I guess the prima facie case on the externalities is that food choices lead to health problems which cost money to treat and most people don't have money. Health care is more expensive than any average person could afford even if they have money so we have to promote good dietary choices to reduce disease in the first place to avoid the usage of the health care industry which is
necessarily subsidized by government.

But there are alot of assumptions to examine before making those connections and arriving at the external costs.

I can understand the consequences of Alcohol. Car collisions, Crime, Violence and have been demonstrated over and again. I can accept smoking in public causes others to suffer.
I'm not sure of sugar in an anti-social role.

Early awful deaths aren't necessarily more expensive compared to living 90 years and treating chronic diseases for decades.

These types of proposals horrify my inner libertarian. They are too personal. And how can you enforce it? The black market for pop tarts will be enormous. :P

Tom Hickey said...

The real problem here is that kids are being targeted. The health statistics for young people are truly shocking — obesity, high blood, pressure, and diabetes, for example.

Bernanke just said that the elephant in the room is health care costs. Negative externalities contribute to this super-issue.

Michele Obama spearheaded a long-standing drive to improve the nutrition of school lunches, and a somewhat watered down version passed. It is now being implemented, but there is a long way to go in improving child health. Unhealthy children become unhealthy adults and create a drag for their entire lives, not to mention their own reduced quality of life and performance.

Tom Hickey said...

@ TB, as a libertarian also, I prefer to see taxation used to adjust market price to true cost including externalities rather than regulation that prohibits choice.

However, with negative externality there is also the question of uniformed citizens and under-informed market participants. It is in the interest of those receiving a subsidy from negative externalities to restrict information, or even to sow disinformation, as the tobacco companies did when continuing to promote their product falsely although they were privy to the negative findings of research.

Of course, children need to be protected even by prohibitions since they are not capable of informed choice or acting responsibly — nor are their parents in many cases. Then it becomes a social problem that only government can address effectively and efficiently by fashioning appropriate policy.

reslez said...

Heaven forbid we coerce anybody. So as long as we're not coercing people, how about we also put an end to the propaganda advertising that exploits innate human cognitive errors and causes people to 'choose' a deadly diet in the first place?

Baby boomers have been brainwashed since childhood to eat empty calories, exactly as advertising instructed. Now the boomers are dying of obesity and diabetes, and life expectancy is decreasing across the U.S. Say, isn't that one of those externality thinggies?

Maybe Medicare should send the bill to Nabisco.

Unknown said...

So government impose tax on sugar to solve obesity crisis, is it a positive externalities from production?