Governments love sin taxes and not because they want to punish sinners. Taxes on 'sins' like smoking, boozing and gambling rake in billions of dollars every year. In March, the B.C. government called for input on what to do about childhood obesity, and where might that lead? Well, the BC Medical Association, worried about the growth in other peoples' waistlines, wants government to create a new sin – drinking soda pop – and tax it.
The prospect of getting permission for a new tax to fight fat has, no doubt, politicians and bureaucrats licking their lips in anticipation. However, if we let government invent a new sin and tax it, will we lose weight, or will our wallets just be lighter because government now has more of our money to waste?
Obesity rates seem to be rising in the developed world, but before we let government take even more of our money, maybe we should ask a simple question – do fat taxes reduce obesity? The BC Medical Association uses a Statistics Canada report, Fitness of Canadian children and youth: Results from the 2007-2009 Canadian Health Measures Survey, to bolster its case for a fat tax. However, this study shows it's a lack of exercise, not soda pop, that is behind today's higher rate of obesity in children.
Not only that, some states in the US already have fat taxes and they have higher levels of obesity than B.C. does. California, for example, has a 6.25 per cent tax not just on soft drinks but on chips as well, and about 25 per cent of its population is obese. Washington State, right next door, has a 6.5 per cent fat tax on both soft drinks and chips and 26.4 per cent of its population is obese.
In B.C., with no fat tax, 13.6 per cent of the population is obese. Seems a fat tax has no effect on waistlines. So why would a government consider a fat tax?
A fat tax, like other sin taxes, is a cash grab. Sin taxes are popular because they allow government to appear to be battling behaviours deemed undesirable by some special interest group; but because a hike in the price of sin often does little to reduce consumption, it means government cashes in. The tobacco tax hike is a good example. In February 2009, the B.C. government increased the tax on a carton of cigarettes from $35.80 to $37.00 and the tax on a gram loose tobacco from 17.9 cents to 18.5 cents. In 2009, the B.C. government collected $682 million in tobacco taxes. In 2010, after the tax hike, the B.C. government collected $740 million in tobacco taxes. Ironically, the smoking rate had declined between 2003 and 2009, just before the tax hike. Government taxes tobacco not because it is morally opposed to smoking but because the tax is a cash cow.
Supporters of a government solution to every problem argue the government has an obligation to stop people from getting too fat because in our socialized medical system, the cost of people eating whatever they want falls to the taxpayer. But people engage in risky behaviour all the time and that costs the taxpayer too. If we accept the idea that government can arbitrarily decide what we can and cannot do, the door opens to unlimited government interference in our most basic personal decisions.
A fat tax probably won't reduce peoples' waistlines but likely will fatten government waistlines with dollars it can waste on big government salaries, stadium roofs and law-breaking bureaucrats' legal bills. Instead looking for excuses to confiscate more of our income, government should go on a diet.
This article first appeared in the Vancouver Province, March 25, 2011