Soda Tax or Bottled Water Tax?

Obama’s health care plan is expected to cost more than $1 trillion. The most likely source of funding: taxes.  The Senate Finance Committee recently proposed a three-cent tax on sugary drinks including sodas, energy drinks and sports drinks. Diet sodas would be exempt.  Not only would this proposal aid in funding the enormous health care bill; it would also, according to legislators, reduce consumption and therefore decrease obesity.

However, some argue that a tax would not reduce consumption, and that education – not higher taxes – is what is needed to encourage others to live a healthier lifestyle.  The debate has made it difficult to pass a soda tax, as New York Governor David Paterson discovered when his proposal for a statewide 18 percent tax on soda failed. He recently revived the effort with the amendment that taxes on bottled water and diet soda would be removed if the soda tax passed. However, even with the removal of a diet soda and bottled water tax, some New York residents are still opposed to the idea as a soda tax would only pay for a tiny portion of the entire health care plan. Moreover, Americans can be picky and would likely be unwilling to make the switch from regular to diet soda or even bottled water, if they don’t already drink it.  And recent news has revealed that bottled water is not necessarily healthier – for people or the environment.

According to a recent study, a small tax on soda would not likely reduce consumption or prevent childhood obesity, but a larger tax probably would.  In a recent post on the bottled water tax, we argued that people who purchase bottled water probably don’t care too much about the cost, since they can get the same thing from their faucet at home for a lot less but still choose not to.  Soda doesn’t run from the faucet, however, so perhaps cost matters more in this case.   What do you think?  Would you change your drinking habits to save money?