Column: Soda tax won’t curb isle obesity, may hurt low-income people

Obesity is a problem in Hawaii. Although Hawaii is one of the healthier states in the country, the state’s record on health falls short.

According to the United Health Foundation, 25% of all adults in Hawaii are obese, which means a BMI (body mass index) of over 30. Obesity comes with a long list of potential health problems: hypertension, Type 2 diabetes, heart disease, stroke, sleep apnea, mental illness, and even an increased risk of dying from COVID-19.

In response to this worrying figure, Gov. David Ige has proposed a 2-cent tax on soda and other sugary drinks. The idea is that by adding more taxes on soda, fewer Hawaii people will consume those beverages, and that will help combat obesity. The revenues of the bill will be put toward obesity and chronic disease programs and the tax is estimated to generate upwards of $60 million per year. In defense of House Bill 994 and Senate Bill 1148, the governor has explained that soda taxes in other jurisdictions have “really changed sugary beverage consumption.”

When described like that, a soda tax sounds harmonious. Who doesn’t want to curb obesity?

Unfortunately for supporters of the tax, the evidence isn’t really there. Consumption taxes like this are often highly regressive, meaning that low-income residents bear most of the burden.

Looking to Mexico provides a good case study on the efficacy of soda taxes. With one of the highest obesity rates in the world, Mexico enacted a soft drink tax, increasing prices by nearly 13%, with the goal of reducing caloric intake.

A time-series analysis of the impact of the tax showed that it reduced consumption of these drinks by only 3.8%, which represents less than seven calories per day. Estimates from Canada also show the same trend. When the Canadian province of PEI looked at the prospect of a soft drink tax, a 20 cent per liter tax was only estimated to reduce caloric intake from soda by 2%, which is approximately 2.5 calories per day. While these taxes do in fact reduce consumption to some degree, the reductions are so small that they have virtually no impact on obesity rates.

To make matters worse, not only are taxes like this ineffective in combating obesity, they are heavily regressive. Looking again at the data from Mexico, the tax implemented there was largely paid for by those with a low socioeconomic status.

In fact, a majority of the revenue, upwards of 63%, was generated from families at, or below, the poverty line. If we take the governor’s estimation of $60 million a year in revenue, it is reasonable to assume that $37.8 million of that revenue will be coming from the pockets of low-income Hawaii families. In other jurisdictions in the U.S., such as Cook County, Ill., no soda tax has avoided the uncomfortable reality of being regressive, which is partly why they eventually abandoned the tax altogether.

Hawaii’s people need to ask themselves: Is it worth implementing a heavily regressive tax on low-income families to move the needle on obesity by a few calories a day? I’d argue that the negatives of the tax far outweigh the benefits, and that’s before business impacts enter the equation. This also happens to be the same conclusion found in New Zealand.

The New Zealand Institute of Economic Research, in a report to the Ministry of Health, stated that “We have yet to see any clear evidence that imposing a sugar tax would meet a comprehensive cost-benefit test.”

While obesity might be a serious problem for Hawaii, a soda tax isn’t a serious solution.

David Clement is the North American affairs manager with the Consumer Choice Center.