This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
More than 230 years ago, Adam Smith, in his book The Wealth of Nations, wrote, "Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation."
On July 1, the state's new tobacco tax went into effect. The state expects to receive approximately $43 million in 2011 from this tax. Because the tax targets the 10 percent of adults and the 7 percent of juveniles who smoke, it is lauded as a good tax because smoking is unhealthy and making it more expensive may encourage some to quit, or in the case of the youth, to act as a deterrent to taking up the habit.
The polls at the time showed that the majority of the people supported the tobacco tax. Of course, the majority of the people don't smoke, so no surprise there. Assume for a minute that the people and the Legislature supported the tax because (a) it raised much needed revenue, and (b) promoted healthy living. If so, then they should be interested in the following:
About 23 percent of adults and 11 percent of children in Utah are currently obese or overweight, according to the authors of "F as in Fat: How Obesity Threatens America's Future" from the Trust for America's Health and the Robert Wood Johnson Foundation (Salt Lake Tribune, July 15).
Daily caloric intake of sugar from sweetened beverages rose from 70 calories in 1977-78 to 190 calories in 2000. I do not have the data from 2000-2010, although it is a safe assumption that intake has increased.
While the consumer price index has risen approximately 200 percent since 1978, the price of carbonated drinks has risen only 100 percent. During the same period, the price of fresh fruits and vegetables has increased a whopping 364 percent. (Data is from the Bureau of Labor Statistics and represents the U.S. city averages for all urban consumers in January of each year.)
If the overall goal is to promote healthy lifestyles, the price increases would be reversed.
There is a great deal of information about the health effects of sugar-sweetened drinks. One study of 91,249 women who were followed for eight years showed the risk of diabetes among those who consumed one or more servings of sugar-sweetened beverages per day was nearly double the risk of those women who consumed less than one serving per month.
In a meta-analysis study performed by the Rudd Center for Food Policy and Obesity, in 15 cross-sectional studies which examined the association between soft drink consumption and milk intake, 13 reported that soft drink consumption was associated with lower intakes of milk and dairy products.
Overall, obesity-related direct and indirect economic costs exceed $100 billion annually. Obesity accounts for 6 percent to 10 percent of U.S. health care spending, compared to 2 percent to 3.5 percent in other western countries. Moreover, obesity accounted for 27 percent of the growth in real U.S. health care spending between 1987 and 2001.
Tax revenue calculations from the Rudd Center show that the state of Utah could raise $125 million through a tax of just 1 cent per ounce on sugar-sweetened drinks.
This estimate shows that the number of people who cut their consumption of sugar-sweetened soft drinks should, from a health standpoint, be two to three times the reduction in the intake of tobacco.
Therefore, if a healthier Utah is the goal, taxing sugared soft drinks would have a much greater impact than raising the tobacco tax.
Marlin Struhs is adjunct faculty at Webster University and Columbia College, where he teaches economics.