As Halloween passes, lawmakers in cities across the country should take a cue from Cook County, Illinois and give taxpayers a treat by ditching burdensome sin taxes, including excise taxes on soda and other sweetened beverages.
In July, the Cook County government began collecting additional taxes on all sweetened drinks sold to consumers in bottles, cans, or from dispensers, including soda, iced tea, lemonade, and sports drinks.
On October 11, the Cook County Board of Commissioners overwhelmingly voted to repeal the tax, rolling back the penny-per-ounce levy. Unsurprisingly, the tax was very unpopular among both consumers and taxpayers. In September, 85 percent of polled residents in the county told pollsters the soda tax should be repealed.
An earlier August poll, commissioned by the Illinois Manufacturers’ Association, found residents were suspicious of the tax’s intentions; 87.5 percent of respondents told We Ask America Polls they believe the tax was not primarily created to improve their health, but for “other reasons.”
A week before the Board of Commissioners voted to repeal the tax, on October 5, board President Toni Preckwinkle (D) said she supported making soda more expensive for residents because she cared about people.
“So in my view, the choice is simple,” Preckwinkle said. “Do we want Cook County to be healthier, safer, and more efficient? Or do we want to go backwards?”
After the vote, Preckwinkle unveiled the real reason for her soda tax and criticized the board for creating a gap between county government spending and revenues.
“I presented a balanced budget, and those who decided that sweetened beverage tax repeal was appropriate understood that meant we would be $200 million short in revenue,” Preckwinkle said. “I presume that they have something in mind in terms of either alternative sources of revenue or cuts to balance the budget.”
Lawmakers are often reluctant to explain why Preckwinklian policies have been adopted in so many parts of the country, but economists have known for a long time sin taxes do little to improve health and are typically created by lawmakers seeking an easy way to take taxpayers’ money.
In 2011, U.S. Department of Agriculture Senior Economist Biing Hwan-Lin and University of Florida Department of Food and Resource Economics professor Jonq-Ying Lee published a study in the journal Economics and Human Biology that aimed to determine the effectiveness of using tax policy to improve public health. The study simulated the effects of a hypothetical national sugar tax, which would theoretically reduce the average American consumer’s body weight by one pound. The authors found by adding 50 cents per ounce to the price of all candy and soda sold in the United States, there would likely be an “average daily reduction of 34–47 calories among adults and 40–51 calories among children.”
Both these figures are much too small to have any meaningful impact on health.
As Preckwinkle later admitted, sin taxes don’t significantly improve public health, but they greatly benefit government’s financial health. Using real-world consumer data, Hwan-Lin and Lee’s 20 percent soda tax would likely increase government revenue by $5.8 billion.
The Cook County Board of Commissioners did the right thing by axing the soda tax. And in this rare occasion, I recommend lawmakers across the nation follow Cook County’s lead, by rejecting the use of tax policy tricks that fool consumers into doing what the government thinks they should.