If sin such a terrible thing when it comes in the form a can of Coke? Well, yes it is when the planet cannot afford that waste of resources, the product is laden with anti-competitive protections and potential tax loopholes, and it happens to have contributed to substantial increases in childhood (and other) obesity. Those are sins. If sin is, as a wise priest once put it to me, missing the mark in the sense of not doing the right thing, then just making and selling Coke comes pretty high on the list of sinful things to do. And, of course, it is not the only product that is going to fall into that category.
But does that mean that a tax on Coke (and other such products) solves the problem of its production? This is the question that Boris Johnson is apparently asking, as he has questioned whether or not such taxes actually work in reducing consumption and whether they are fair, because it is likely that they are regressive.
I have some sympathy with Johnosn's questions, for a change. What we know about these products, and others like tobacco and alcohol, is that they are addictive and so have a high inelasticity of demand with regard to price because people might seek to but them, whatever the charge. If that is true then they might be good sources of revenue but they might not do much for changing behaviour. And nor does the argument that we need the revenue stack in a world where we know that modern monetary theory holds true: treatment of obesity is not dependent upon our ability to raise revenue for that treatment. It is, instead, dependent upon political willing to address the issue.
I have long argued that taxes can have the role of addressing market failure. I stand by that. That is one of my six reasons for taxation. But, whilst tax is a powerful social instrument I do not suggest its use if there is a better tool to use to achieve the goal.
In this case I fear that Johnson might be right. I suspect that taxes on sugary drinks do not change behaviour as much as is necessary. And I do suspect that they are regressive in their impact. In that case, and noting my MMT point, I hate to admit it, but he may have a point.
But please do not think I actually agree with Johnson. His argument is that the state should not intervene on such issues. He is opposed to the ‘nanny state', which requires that he ignore the impact of market power in this relationship, all of which lies with the likes of Coca Cola. The product that they sell is abusive. They expend considerable sums ensuring that people do become addicted to it. And the result is significantly socially damaging, creating harm for vast numbers of people whose lives are blighted by obesity. Tax may not stop this abuse, but that is not reason to ignore the issue. Direct intervention is required instead. Sugar, salt and other harmful additives must be tackled by law, and their use be severely restricted.
Tax is a fantastic tool. All I am saying is that it is not the answer to every problem, and that this may be one of them.
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Johnson, self-proclaimed opponent of the nanny state, banned consumption of alcohol on London Transport on his first day as Mayor.
His inconsistencies, dishonesty & lack of seriousness make trying to find anything useful in his alleged beliefs a waste of time. Like Trump, he’s a charlatan unfit for public office. He will most likely break the record for the shortest serving PM if he gets into office.
“Johnson, self-proclaimed opponent of the nanny state, banned consumption of alcohol on London Transport on his first day as Mayor.”
Good. Drunks on public transport can be a pain in the neck. to fellow travellers. A nanny state would make it an offence to be in possession of a ticket whilst under the influence of alcohol 🙂 He didn’t go that far; not by a long shot.
And no, I’m not particularly a Boris fan, but credit where it’s due. There isn’t a lot of it.
Perhaps sin taxes, while regressive to those already addicted, help reduce the number of people who get addicted in the first place?
In any case, in a world massively over consuming and facing the climate emergency all advertising should have been banned decades ago. Advertising for Coca Cola should absolutely be banned by the state now, along with other direct interventions to reduce the harms caused by this and other products.
I agree re advertising – see my book The Courageous State
Adam @ 11.29 ‘ Advertising for Coca Cola should absolutely be banned by the state now’
RM @ 11.31 ‘I agree re advertising — see my book The Courageous State’
Nice to see those liberal principals in evidence once again
Is a book a harmful substance?
Bill, I don’t think you understand the climate emergency.
Why?
Adam says:
“Perhaps sin taxes, while regressive to those already addicted, help reduce the number of people who get addicted in the first place?”
Yeah right. That’ll explain why young people don’t start smoking, drinking alcohol or using illegal drugs these days and such social problems are now a thing of the past.
I suggest advertising is a mere scapegoat. The illegal drugs market has never had advertising opportunities except in so far as the Media provides a constant stream of the ‘no such thing as bad’ variety.
Trust politicians to find a way of taxing the consumer rather than the producer.
Every local authority should be entitled to an annual fee from the producers of junk consumables just to collect their empty containers. Nearly all street litter is the packaging from products which are nutritional garbage (including particularly tobacco wrappers and cigarette ends) and I’m personally inclined to include bottled water in that category. (Water has become a fashion accessory).
The Scottish government has apparently approved a scheme to levy deposits on plastic drinks containers. It will be interesting to see how that can be implemented in practice, and what difference it will make in terms of both consumption and littering.
Adam, I may not understand people’s interpretation of the reasons for a change in the global climate, but rest assured, I understand what a dictator is, and what should be done to ‘reduce the harms’ caused by them.
Banning stuff for people’s own good quite regularly I would imagine Adam are we ?
Your comment does not make sense
Might you explain what you are suggesting, and why?
https://continentaltelegraph.com/ragging-on-ritchie/making-and-selling-coca-cola-is-a-sin-says-the-senior-lecturer/
What do you think of his line of argument (putting aside the neoliberal bigger picture) and just focusing on logic?
My response is very simply: nothing Worstall has ever said is worth responding to
You are spot on about Worstall. Specious and sleight of hand arguments are his stock in trade.
On sugary drinks I’m a bit more worried.
First they should be taxing sweetness not sugar, The soft drink cos have substituted other things (eg aspartame) for sugar and there is increasing evidence that these may be as bad for you if not worse than sugar itself. Indeed they have been permitted as sweeteners without any prior evidence one way of the other. What happened to the precautionary principle?
Of course such taxes are indeed regressive, but soft drinks are empty useless calories and serve no purpose whatsoever other than making profits for their producers – and us fat.
As they are so cheap to produce they are able to spend a fortune on advertising, as you indicate. This needs either to be banned or they should be required to allocate at least half of any advert time or space to the fact that ‘You cannot outrun a bad diet’.
https://www.dietdoctor.com/lets-stop-lying-about-physical-activity-and-obesity
Which gives the lie to the idea that reducing calories and exercise makes you lose weight.
Otherwise a calorie of chocolate digestives would be just as good for you as a calorie of broccoli.
We should, I think, use both tax and advertising to try and educate…
We agree…
Bill, I didn’t mention anything about banning Coca Cola for people’s own good. That’s a straw man argument. There is nothing anti liberal about preventing people from harming others. You can be liberal and legislate against murder. You can be liberal and legislate against assault. And you can absolutely be liberal and legislate against companies advertising and propagating the consumer culture that is sending is rapidly towards extinction.
Like I said, you don’t understand the climate emergency, and that if we don’t reduce net emissions to zero the harm to hundreds of millions of people will be too great to calculate. And it doesn’t take a dictator to create the laws opposing it.
I’ve just got back from the hospital tonight – a very busy emergency reception ward – my mother has COPD as she has smoked all her life and has added complications because she is also an alcoholic. Her outlook at 84 is poor – she has less than 12 months to live.
Taxes on booze (BTW, one of the biggest contributors to obesity too because sugar in alcohol is turned into fat by the body), tobacco and sugar – yes – bring it on – a health tax – that’s what it could be. How many people may have been diverted away from that hospital tonight because of the self-inflicted problems my mother brought with her? And look at any A&E at closing time.
Why is booze so expensive in Norway? Because if it wasn’t people would drink themselves to death in the dark winter months.
And liberty – freedom – the enablement of people to hurt themselves and not be given better alternatives? OK Boris – no nanny state but no nanny private sector either – so lets also see cut backs or the cessation in advertising sugary drinks and crap food too. Now that would be fair.
But to those talking about ‘freedom’, ‘liberalism’ and ‘liberty’ – well I saw what those can look like on a hospital bed tonight and it sure looked and felt like shit to me .
So sorry PSR
Go well, and your mother too
Much appreciated – thank you.
Hi Richard, I had thought perhaps to tax corporations producing these goods at a higher rate of tax (after profit declared), but a few people suggested to me that the companies would still hit the consumers for this in the price of their products. Banning the advertising of these goods? In Australia we have limits in place on tobacco advertising but it hasn’t stopped the consumption. Should we look at banning these harmful products? Production might go underground (tobacco) or the companies would forever be looking for alternatives that have the same effect (sweetening e.g.). What to do?
An advertising ban is the start
And then an enforced limit on the harmful contents has to be the case
And I simply cannot see why not
Tax alone is not sufficient to effect sustainable behavioral change. But it can be an effective element in a fully researched and integrated Social Marketing campaign. Social Marketing is a proven discipline in achieving behavioral change – yet still not properly understood, let alone applied, by those in power (somewhat akin to MMT!). This brief explanation by Prof. Cyd Maubert offers a simple overview – https://www.youtube.com/watch?v=Bx_DnXenbHU. And this old Guardian article offers a lay explanation – https://www.theguardian.com/sustainable-business/blog/social-marketing-behaviour-change. For those interested a Google search will throw up many academic papers and YouTube lectures. The Godfather of Social Marketing is Prof. Philip Kotler at Chicago’s Northwestern University. (I was directly involved in organising the world’s first Social Marketing conference in Brussels back in 1975. Just saying ….)
Thank you!
Behaviour change or HEALTH?
Yes you can use taxes to shift individuals behaviours but that does not necessarily make them healthy. Often a more complex approach is needed including some empowerment.
Taxes are often used as simplistic magic bullets.
For healthy eating see>>
https://www.bmj.com/content/361/bmj.k1963/rr
For alcohol see>>
https://www.bmj.com/content/365/bmj.l2246/rr-0
I agree
Maybe I read over the comments to quickly, but isn’t there an argument that a sugar tax should pay for the costs that are caused by sugar consumption (diabetes, heart, cancer, …)?
This principle could also be used to calculate the amount of tax.
Even the sugar consumers should be in favour of such a tax as they then do not need to feel that they are letting other people pay for their own pleasure.