There are a lot of debates around new tax on banks, sodas and eventually fast food. They hope these taxes can help provide an emergency fund for failing banks in the case of banks or in the case of sodas to help with healthcare costs. They are talking about a 3 cents tax on a $25 billion dollar industry.
A good policy to promote health living is one thing, taxing products is a different one. Too much sodas cause diabetes, too much hot dogs cause cancer, too much time on your cell phone cause brain cancer, too much fast good burgers cause obesity, too much alcohol causes liver problems and too much medication causes god knows what. Too much anything is bad. How much do we want government to tell us what to eat? Or it is just another way to expand tax base?
This is not a fair tax, it is almost like lottery, as the regressive tax will mostly contributed by lower income families. It is a tax for those who can least afford it or don't have any better options. Believe me, these taxes will end up not subsidizing healthcare but misapplied for other purposes. Just look at the tobacco tax governments collected, what percentage of those are used for funding healthcare?
The better approach is to work with these companies and making sure they provide healthier alternative to expand the choices available. You can ask them to subsidize these healthier products from the profit pool. They use the argument for a soda tax the same as the argument for a tax on tobacco, plastic bags etc. The logic was if an activity imposes costs on society, economists believe that the activity should be taxed hoping to achieve two objectives: discourage consumption, and it raises money to help pay for society’s costs. The reality these little tax won’t change consumer behavior; unless the tax is so high that makes soda unaffordable. This tax is a very stupid idea.
So what’s next? Let’s tax those invest in high risk (hedge funds) investments as these activities increase volatility in the market and hurt many longer-term investors/savers? Now this one won’t affect the quality of lower income families.
Or let’s tax video game purchases so the tax could go towards helping under privileged children for their education? Or taxing high-income rock stars with a special tax to support good TV educational programming to offset their negative influences? And are we going to tax every large appliance that people purchase for their dream kitchen? Or should we tax the fashion stores that encourage people to buy the latest style every week? Are these considered “addiction”? Some economist uses the phrase "addiction" to describe certain behavior and believe more tax is the answer. Let me tell you, it is not.They think people will buy that?