Human Nature

Liquid Candy

The new addiction is taxing addictions.

The world’s best business model has always been addiction. Tobacco and alcohol have been around for ages, but new temptations and spinoffs are being marketed all the time: meth, painkillers, energy drinks, you name it.

Now a new class of addictive products has been devised. They’re ingeniously easy to produce. Just take any addictive substance already on the market and invite politicians to tax it. The new addiction is taxing addictions.

When taxes on cigarettes were first proposed, the revenue was supposed to be used to help smokers quit and to prevent others from starting. But it didn’t take politicians long to siphon the money away for other purposes. Now state governments count on cigarette revenue to help fund their budgets. We’ve all become nicotine-dependent.

Marijuana advocates are trying to repeat this trick. The quickest way to a politician’s heart is to dangle money. So the pot lobby is telling lawmakers in cash-starved California exactly how much revenue they can collect  by legalizing and taxing marijuana. It’s a truth older than democracy: To secure the government’s support, just cut the tax man in on the action.

But pot is now being overtaken by a savvier mainstream competitor: the campaign to tax soda. Like the tobacco-tax movement, the soda-tax movement began with a rationale of preventing and curing addiction. And like the tobacco-tax movement, it’s evolving into a revenue addiction.

The latest sign of this trend is a report issued last week by the Center for Science in the Public Interest, which lobbies for regulation of harmful products. The press release announcing the report is headlined, “Taxing Soda Could Trim State Deficits (and Waistlines), Says Report.” It begins:

Even as 48 states and the District of Columbia are facing grim budget shortfalls, only 25 states currently impose special taxes on soda and other beverages with added sugar, and all of those taxes are very small. And according to a new paper from the Center for Science in the Public Interest, states could generate a total of more than $10 billion per year by levying a tax of 7 cents per 12-ounce can of Coke or Mountain Dew. If implemented by Congress in the form of a national excise tax, that $10 billion could make an important contribution toward paying for health coverage for all Americans.

The release goes on to talk about the public health benefits of reduced soda consumption. But that rationale, which used to be primary, has now been reduced to a parenthetical afterthought. The CSPI report itself is broken down into three sections. The first section header says, “State Budgets Are in Trouble.” The second says, “Taxing Soft Drinks Would Reduce Budget Woes.” The third says, “Obesity, Soft-Drink Taxes and Health.”

Of course, any good pusher knows that the best way to hook a new customer is to get him to sample the product. So the release adds: “On its web site, CSPI has a Liquid Candy Calculator that enables legislative staffers or citizens to calculate the revenue their state could raise from sales or excise taxes on sugar-sweetened beverages.” I went to the calculator this morning to taste the benefits of a 5-cent-per-can tax in my state. Answer: $135 million. Yummy! A 10-cent tax got me $253 million. Even yummier! But I was disappointed that the yield didn’t quite double. I started to wonder how much I could tax each can without dampening the rate of consumption. Talk about liquid candy.

“About half of the states have small soda taxes and there certainly hasn’t been any outrage over them,” CSPI’s executive director points out in the press release. “If the Senate Finance Committee decides to leave these billions and billions of dollars on the table, I suspect more state legislatures will tap soda taxes to help pay for their own prevention efforts.”

Come on, Senator. You need the money. If you leave it on the table, somebody else will take it. Just visit our calculator and try a sample. It’s like taking candy from a baby. In fact, it is taking candy from a baby. And (parenthetically) that’s a good thing.