Tuesday, 30 December 2008

The New York State "fat tax"

New York State Health Commissioner Richard Daines has endorsed Gov. David Paterson's revenue-generating budget proposal to create a so-called "fat tax" - an 18 percent levy on sugary drinks like non-diet soda. His endorsement, published on You Tube December 26th, is a five minute dialog which describes the increased consumption of sugar laden drinks, the concurrent rise in obesity, and the cost and impact of the obesity epidemic on the public. The tax is arguably focused on health care policy as opposed to revenues. Elizabeth Benjamin of The Daily Politics covers the issue in her blog post The Doctor is in (Cyberspace).

Daines also quotes a research editorial from the Journal of the American Dietetic Association called How Discretionary Can We Be with Sweetened Beverages for Children which concluded: "Only one high-risk dietary practice emerged as being linked to overweight in children: the intake of sweetened beverages."

[Note from Parke: Cool video, Ashley. I like Daines' effective use of props for data visualization. Because of this New York proposal, I've been getting questions from consumer advocates about the economics of soda consumption. In a nutshell, if people greatly change their consumption in reaction to such a tax, their response is called "elastic." If consumers don't change their consumption much, the policy does better for revenue generation. In a 2004 study of low-income Americans, in the journal Agribusiness, Steven Yen, Biing-Hwan Lin, David Smallwood, and Margaret Andrews estimated the price elasticity for soft drinks to be -0.8, which means that a 10% increase the soft drink price leads to about an 8% fall in soft drink consumption. At the same time, the price increase for soft drinks makes milk and juice products comparatively more attractive to consumers.]

No comments:

Post a Comment