Wednesday, March 10, 2010

Taxing Soft Drinks...Good idea or not? The Delivery Drivers HAVE to know what you are going to do!!

NYTimes Editorial:  Healthy Solution: Taxing Sodas

Seldom does one idea help fix two important problems, but a proposal to tax sugary soft drinks in New York State is just that sort of 2-for-1 solution. The penny-per-ounce tax on sodas and other sweetened drinks is a way to raise desperately needed money for the city and state in a bad economy. It also could help lower obesity rates, which have soared in recent years.  
It is assumed by the editorial that soft drinks produce "negative externalities"--costs imposed on others that are NOT paid for by the producers and consumers of soft drinks, i.e. healthcare costs borne by the state of N.Y and its taxpayers (who may or may not consume soft drinks).
It is time for Albany’s lawmakers to stand firm against the soft-drink lobby. Their claim to be standing up for New York’s poorest residents obscures the fact that those same people are their customers of choice. Poorer people, who lack healthy food choices, too often overload on sugar-laden soft drinks. Even though soft drinks are not the only cause of obesity, people in lower-income areas tend to suffer more from obesity, diabetes and other obesity-related illnesses...The costs of health care for these illnesses are rising steadily. State budget analysts estimate that obesity-related problems cost the state an estimated $7.6 billion annually. This tax could bring in about $1 billion a year to help with those costs
This excise tax on either demanders or suppliers certainly will decrease the private market quantity supplied and demanded and produce a more "socially optimun" market quantity.  Less sugar consumed, fewer healthcare problems, hence less healthcare costs incurred, true.  But in economics we look for the unseen effects of this policy...The one that came to mind for me was the lost jobs due to the smaller, socially optimal quantity.  Few drinks to make and deliver.  Producers will need "at the margin" fewer production workers and delivery truck drivers, fewer trucks, etc...you get the point...Why no mention of the lost jobs due to decreased production?  Is this a legitimate point to raise?  Perhaps it is not fair to even suggest there is a trade-off like this when public health policy is made, but, hey, that is what "The Economic Way of Thinking" does to you...:)
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