Pigovia revisited

ABC Online Call for tax on sugary soft drinks 17 January 2013 Three of Australia's biggest health groups want the Federal Government to follow the lead of some other countries and introduce a tax on sugary drinks.

Farvel fedtafgift, g'day soft drink tax. In a public health system, adverse consumer action constitutes a negative externality. Deadweight loss ensues unless the state corrects for this via taxation.

One of the main criticisms of such taxation is that it may be regressive, placing disproportionate marginal burden upon the poor. This could be corrected if the tax is revenue-neutral, with proceeds used to subsidise healthier food options; as a university student I often felt that, rather than 2 fruit and 5 veg daily, it was cheaper to just buy a 1.5 kg pack of no-frills frozen dim sims.

Another common criticism is the "nanny state" argument, that government should not overstep in restricting individual autonomy. In an idealised theoretical world, autonomy could be upheld if individuals are allowed to opt-out of such Pigovian taxation, at the fair price of surrendering certain benefits of the public health system. A practical world, however, runs smoother with certain necessary evils; relatively little critcism is voiced against other theoretical injustices such as mandatory superannuation and strict liability.

Representing soft drink makers, the Australian Beverages Council presents peculiar protestations. While seeming theoretically passable, the argument that obesity should be addressed by targeting "all kilojoules" rather than sugar in particular is neither supportable by evidence¹ nor relevant in the larger context as other adverse health outcomes such as diabetes and cardiovascular disease become increasingly correlated with specific caloric composition rather than sum alone. Although the "Henry tax review" did not recommend increased taxation on unhealthy foods, I do not feel public health policy was really within the scope of that commission.