The political peril of nanny-state policies like the sugary beverage tax

In The Philippines, a bill is pending before the Senate which would skyrocket taxes on sugary beverages such as soda pop and iced tea. The bill follows movements across the world, led by billionaire MIchael Bloomberg, where countries or local governments have tried to tax sugary beverages in order to increase state coffers.

While proponents of the tax say that the measure is about improving public health, evidence shows that the issue is more about bringing in government revenue than it is about health.

The great Chicago backfire

Look at Chicago, Illinois, as an example. In 2017 the Cook County Board of Commissioners implemented a sugary beverage tax, which included diet sodas, as a way to improve the health of the local population. The tax went down in flames just barely after it was implemented because the public saw it for what it was: a money grab from an easy source.

Toni Preckwinckle, the Cook County Board President, has taken heat - both in the media and politically - for pushing the measure through the county board, despite its fierce opposition from the public from the very beginning. Known as “Queen Sugar,” Preckwinkle now has an opponent in her next race for re-election, a political challenge that, before the passage of the sugar tax, would have been laughed off. But now pundits and Chicago politicos are taking the challenger seriously.

It seems that Preckwinkle’s nanny state policies have put her political career in jeopardy.

Will the Philippines listen to Bloomberg or the public?

The same course of events is playing out in the Philippines. The Senate’s finance committee holds the playing cards on the issue; voices of the public and small business owners have largely been drowned out by Bloomberg’s international drumbeat.

The Senate of the Philippines is considering adding new taxes to drinks that have sugar in them. The bill is known as the “SSB Tax”. The Philippines’ Congress held a hearing during the summer on the measure; several people from various areas of government and industry testified. Some of the government testimony was nonsensical. For example, the Department of Health Undersecretary Mario Villaverde said he supports the tax and said that sugar in beverages is not necessary because the body has a natural ability to get the sugar it needs from rice, root crops, and other sources.

Trends indicate the SSB tax might be unnecessary

In addition to being primarily a revenue measure, the SSB Tax may not even be necessary as a means to decrease sugar consumption.

Data shows that, after decades of stable growth (demand for sugar almost doubled per person since 1960), demand for the world’s sugar industry is headed for a tipping point. The Food and Agricultural Organization of the United Nations data specifies that not only are global sugar prices predicted to grow at a less than 2% annual rate, but the overall price is expected to drop by 17.11% by 2026.

Additionally, manufacturers of sugary beverages are stepping in to cut the sugar content of their beverages. Coca-Cola has 200 reformulations of products in the works to lower sugar content, Chief Executive Officer James Quincey said in October. PepsiCo Inc. has vowed that at least two-thirds of the company’s volume will have no more than 100 calories from added sugars per 12-ounce serving by 2025.

Not only is the tax unnecessary, but the issue is being framed in a fundamentally deceitful way. As Chicago shows, passage of a sugary beverage tax can have huge political implications for elected officials. In the case of Preckwinkle, it is putting political lives on the line. This is a result of a fundamental mismatch between the stated purpose of the tax, its real purpose, and the will of the people.