6 Controversial Reasons A ‘Sin Tax’ On Junk Food Could Work

A contentious article published in the June edition of Mayo Clinic Proceedings looks at how “sin taxes” – taxes on cigarettes, alcohol, sugary beverages and fatty foods – can be used to greatly improve public health, as well as generate much-needed government revenue which (you’d hope) could be put back into health promotion.

After all, the risk factors for our most common chronic diseases are all directly related to smoking, drinking, poor eating habits and lack of physical activity.

Assuming that the ridiculous subsidization of tobacco and sugar growing continues (for whatever hidden political reasons), sin taxes would affect 3 of those 4 behavioral determinants of health.

And while I don’t think “sin tax” is the appropriate label here, it’s certainly more memorable than “Pigovian tax” (after economist Arthur Pigou)- although I can give it a try.

Based on what the Mayo Clinic article authors, Dr. Michael Joyner and Dr. David Warner have discussed, here’s 6 reasons a Pigovian tax on junk-food could work:

#1 We’ve been “nannyed” on tobacco and alcohol for decades – it works.

Taxes on tobacco and alcohol are (and have been) highly effective in improving public health. There is a clear beneficial relationship between price and tobacco consumption, and price and alcohol consumption. In fact, Joyner and Warner state that “based on current evidence it is estimated that doubling the tax on alcohol would reduce alcohol-related mortality by about 35%, traffic deaths by 11%, and crime in general by 1.4%.”

Imagine the public health improvements that could be achieved with a junk-food tax.

#2 Potential health benefits justifies a trial

Of course, whether a price-hike on sugar and bad fats would affect consumption is debatable because we don’t have evidence yet. It just hasn’t been trialled properly at this stage.

But it’s certainly not a new idea, and Mayor Bloomberg is still rallying to give it a trial with sugar-sweetened drinks. Furthermore, many say it won’t work because junk foods aren’t addictive like cigarettes or alcohol, but I beg to differ.

The authors wrote, “Given the important role that consumption of these beverages plays in the obesity epidemic, the potential health benefits justify further exploration (of a junk-food tax).”

#3 We can learn from the mistakes of others

A tax on junk food isn’t new. Denmark has trialled it (less than 10% of them are obese vs 34% of Americans). And France currently has a successful tax on sugar-sweetened beverages. The UK, Switzerland and Germany are contemplating fat taxes themselves.

And while the Danish fat-tax ended this year, many of the reasons behind this decision would not necessarily be reproduced here.

For example, the main difference between Denmark and the Unites States is that the Danes already have one of the highest tax rates in the world, so the addition of further tax on fat proved to be a greater financial burden. Furthermore, Danes had been simply crossing the border to Germany or Sweden to purchase food (where prices are as much as 20 percent cheaper).

We now have a great case-study laid out before us in which we can analyze what works and what doesn’t.

#4 Sin taxes raise much needed money – a LOT of it

Increase the tobacco tax by 50 cents per pack, and it’d raise $80 billion over the next 10 years. Increase alcohol tax to 30% (it’s currently at 10%), and over the same time period $250 billion would be generated. Not exactly pennies.

Joyner and Warner go on to estimate the effects of a 1 cent per ounce tax on sugary beverages would raise approximately $15-20 billion per year ($150 billion to $200 billion over 10 years).

And as a real life example, we know that when Denmark’s “fat tax” was in motion, it raised about $200 million in that one year. If the United States introduced a tax on high saturated fat food, it’s estimated to generate $120 billion over 10 years, given the population is about 60 times that of Denmark.

If we sum up the estimates of these 4 sin taxes, we’re looking at about $600 billion or more of increased revenue over 10 years.

This is a substantial chunk of the increased revenue politicians are discussing for the federal budget.

#5 Additional revenue can be used to improve public health

As I mentioned in the very first sentence, the additional revenue generated could also be used to further improve public health.
Joyner and Warner speculate the increase in resources could, “Subsidize care for the uninsured, buffer the fiscal pressures associated with Medicare and Medicaid, promote increased physical activity and better nutrition in the population, build public health infrastructure, or perhaps increase federal funding for biomedical research.”

Of course we have to be realistic – sustained political pressure would be required for the tax dollars to actually be invested in health over the long term, rather than on other more important areas. The military budget for example… ahem.

#6 Sin taxes are not new to America

(I don’t actually agree with the authors that this point is a valid reason, but I thought it interesting nonetheless.)

From its humble beginnings, the US has used sin taxes as a major source of government revenue.

Joyner and Warner highlight that before the 18th Amendment in 1920 (the prohibition of alcohol), alcohol taxes were the single largest component of internal revenue for the federal government, accounting in 1910 for 71% of all internal revenue and 30% of overall federal revenue. Had personal income tax not been created in 1913 through the 16th Amendment, Prohibition wouldn’t have even been financially possible.

Furthermore, it’s believed Prohibition was abruptly ended in 1933 due to the need for additional tax revenues.

Thus, you can see that sin taxes form a big chapter in US history and shouldn’t be viewed as a strange new concept.

So what are your thoughts, have I missed anything? Please have your say in the comments.


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.16 days ago

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Catherine A.
Catherine A.1 months ago

Your way to enlighten everything on this blog is actually pleasant, everyone manage to efficiently be familiar with it, Thanks a great deal. tax services orange county ca

Fi T.
Fi T.10 months ago

Increasing the cost can help keep people's mind sharp to choose well

Sue T.
Susan T.2 years ago

why do I need to be taxed to support your bad decisions?

Government is just another way to take from people who work and give it to people who don't

Pot is next~~~light up and get taxed %25

Annabel B.
Annabel Bland2 years ago

Stop subsidizing corn, which is used to make high fructose corn syrup.

Marie W.
Marie W.2 years ago

Junk food is bad- but where do taxes stop?- maybe vitamins and supplements are next- after all they aren't drugs.. Or your organic lettuce (too healthy and not for the masses); on and on. One excuse for taxing turns into another and another and..so on. NO!

Bryna Pizzo
Bryna Pizzo2 years ago

Thank you! I think it's a great idea.

Kevin Brown
Kevin Brown2 years ago

I work out at least 6 days a week, maybe we should pass a law requiring everyone who DOESN'T work out 6 days a week pay higher taxes because it "not fair" that "I" have to "to fork out money to pay for medical expenses and there are not enough beds or subsidy from govt etc" Same thing, right?

Maybe the "tax jolt" will wake up those "lazy people"?

Junaina J.

PS. Unfortunately people who are doing the right thing and eating healthy have to fork out if the 'sin tax' is imposed. Not fair!!
In the past no one cares about passive smokers suffering the consequences of being exposed to smokers; the innocent victims.
Awareness followed by govt intervention was the key to reducing this impact.

Junaina J.

It's right to say that it is no one's business what one do or consume. But when one is sick due to what we put in one's mouths over the years and one have to fork out money to pay for medical expenses and there are not enough beds or subsidy from govt etc for these very expensive expense then it is the government's fault not providing enough funding/care for the increasing health issues from our junk food cravings. The tax will jolt us to wake up to ourselves and be more responsible for our own health and welfare.