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Fat Taxes a Naïve Prescription for Canadian Health

10/04/2015 10:01 EDT | Updated 10/04/2016 05:12 EDT
D. Sharon Pruitt Pink Sherbet Photography via Getty Images
The social engineers are on the march again, this time demanding a tax on sweet drinks as a way to curb diabetes.

Is there any problem in the world these folks can't solve with a prescription for another tax? No wonder the average Canadian family's number one expense is taxes.

They're coming first for your devilish Coca-Cola and Pepsi. But they aren't stopping there. They also want taxes on sugary fruit juice (you sinister Sun-Rype suckers!), and anything else that tastes slightly better than water.

If they get their way, soon your pumpkin spice lattes (those fat-inducing fiends at Starbucks!), and your double-doubles (how could you do this to us, Tim Hortons?), then chocolate and two per cent milk (you should put water on your Cheerios!), before turning their attention to junk food, then cooking oil, and on and on.

It won't end -- because big government types truly believe higher taxes can solve every problem.

There's a big problem with their prescription: there's no evidence it will work. As the Canadian Taxpayers Federation outlines in our report, Tax on the Menu, multiple, peer-reviewed, scientific studies show no links between pop drinking and obesity. And this is especially true in Canada where pop isn't the most popular drink.

"Food and drink taxes are unfair to the 96 per cent of Canadians who do not face an elevated risk of mortality associated with their weight," the report found. "Obesity is a complex condition with multiple determinants including social, environmental and biological factors. Taxing particular foods or beverages in order to reduce obesity is a naive solution to a multifaceted problem."

One of the reasons pop taxes don't work is the substitution effect. Buyers motivated by tax deterrents merely move down the refrigerator case to fruit juices, sports drinks, milk, liquor and other options -- often with as much (or more) sugar and fat as pop. That's why a pop tax would inevitably spread to other drinks.

The food and drink tax lobbyists claim Mexico as a major success story, because of a tiny drop in pop sales there. But they ignore the much more realistic comparison to Canada -- Denmark, where a broad "fat tax" was brought in.

Danes didn't want to give up their food and drinks, and found ways around the tax. German grocery stores along the Danish border sent flyers into Denmark, touting their "fat tax-free" food and drinks. The number of Danes shopping in Germany jumped by 50 per cent. Cross-border shopping isn't an option if you live in Mexico -- but it is in B.C. A sugar tax here would be great news for Blaine, Lynden, Bellingham and other border communities.

The tax was such a disaster for the Danish economy that politicians voted to kill it a year after bringing it in.

One other interesting note from the Danish experience bears mentioning. Denmark found the tax was especially hard on poorer families. In a country where social equality is an important value -- and enforced through some of the highest taxes in the entire world -- this tax was repealed in part because it hurt lower income earners.

Taxes on drinks and food are nothing more than revenue generators for government, a way to stuff another billion dollars into their coffers by taking money out of the pockets of families already struggling to make ends meet.

To their credit, in the last provincial election, both the B.C. Liberals and NDP rejected the notion of extra food and drink taxes. No new evidence has been found that should change that position. 

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