Sunday, March 20, 2016

Michelangelo's David Comes Out Against Taxing Sugary Drinks

Drink more sugar!

HT that the big guy was out there, Incidental Economist.

I was thinking of calling our tipster the Coincidental Economist because the same day they posted  (Mar. 19) the Financial Times' Comment section was having some of their journos weigh in on:

Is the sugar tax an example of the nanny state going too far?
George Osborne announced the long-debated sugar tax in his Budget this week. This will see a levy introduced on sugary drinks from 2018, so manufacturers have two years to change their recipes. The chancellor claims this will raise £500m a year, which will be diverted towards school sports. What is the point of this tax: is it necessary to tackle obesity in Britain or has the nanny state gone too far? The Financial Times’ columnists and commentators discuss whether the sugar tax is a good or bad idea.

  Izabella Kaminska
Izabella KaminskaGeorge Osborne’s sugar tax isn’t perfect but it’s an excellent start for a nation that is hooked on sugar consumption. A lot of people who have taken umbrage at the tax are focused on its seemingly illogical discrimination against fizzy drinks. But that’s down to new insights in the world of nutritional theory which suggest calories delivered into the bloodstream in liquid sugar form impact the liver more sinisterly than those introduced by way of other nutrients or by food. But sugar as a whole is now viewed as the key driver of obesity not the amount of fat we eat.
By putting undue stress on the liver, sugar impacts one’s metabolism, directly encouraging weight gain as well as often the onset of type 2 diabetes. Another major issue is sugar’s addictive nature. This prevents satiation meaning people who consume a lot of sugar tend to keep eating longer than those who don’t, taking on many more useless calories — something which is exacerbated by the consumption of sugar in liquid form. Some studies on mice have found that sugar is as addictive as cocaine.

And while campaigners say all sugar is bad, some sugars are worse than others. High fructose corn syrup, often used as a substitute for refined sugar in fizzy drinks in the US because of its low cost, is particularly toxic. And all sugars delivered in liquid form — including fruit juices — pose a risk by hitting the liver directly. When sugar is consumed as fruits, however, the associated fibre offset the damage posed by the sugar.

Sugar’s expense used to make it a luxury good, which constrained its consumption. These days, however, the cheap cost of sugar as well as its unlimited supply has exposed its addictive and harmful qualities.

Any measures which deter surplus consumption, such as making it too costly to consume or manufacture in bulk, can help turn sugar back into the sort of luxury good we consume only sparingly. For those who are already addicted and finding it hard to go cold turkey, that is only a good thing.

Martin Wolf
I have long since given up trying to rationalise George Osborne’s policies. Done well, a sugar tax would make sense. I have no objection to measures that improve people’s decisions. But it is done disgracefully badly: ill-targeted and ill-justified.
The right tax would be related to the harm done and would tax all sugary foodstuffs, as well as alcohol, systematically. This is not such a tax. I assume it is just a wheeze to raise a little money from a few large companies, or rather their customers, in a politically acceptable way, while garnering some favourable headlines at a fiscally difficult time....

...Alan Beattie
Alan BeattieOn the political economy of the sugar tax, I think going ahead with marginal cases or badly targeted interventions, such as this, is damaging because it normalises the idea that governments can and should intervene in consumer decisions without a clear explanation of what negative externality is being corrected.

This is demonstrated in the shift from the general smoking ban — a clear and compelling rationale of preventing non-smokers from having to inhale smoke in public places — to proposed bans on ecigarettes, an unproven contention that it encourages children to smoke.

Unless policymakers have a clear cost-benefit framework based on externalities in their heads, they will always be subject to random interventions based on the moral panic of the day, a new fiscal Dangerous Dogs Act in every Budget....MORE
What I'd like to see is an HFCS update to the pro-smoking argument that smokers have no net cost to society because they die sooner, the savings in pension costs and Alzheimer's care offsetting the increased healthcare costs. One of the contributors to The Incidental Economist, Don Taylor, wrote a post (and a book) on the subject.

On a more philosophical level, governments can get as addicted to sin taxes as individuals do to nicotine which ends up putting governments in the odd position of needing at least some of the populace continuing the habits the taxes are ostensibly supposed to reduce, lest the tax kill the golden (or blackened, tar-filled, gavaged liver) goose.