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1 Gerald Prante, Santa Fe Should Not Fatten Budget with Soda Taxes 1 (2007)

handle is hein.taxfoundation/ffjixz0001 and id is 1 raw text is: TAX FOUNDATION August 23, 2007 Santa Fe Should Not Fatten Budget with Soda Taxes By Gerald Prante Fiscal Fact No. 98 The City of Santa Fe, New Mexico, has a budget shortfall of $200,000 that it needs to fill. Every city, county and state faces this dilemma, and there are only two policy options: cut spending or raise taxes. To no one's surprise, the city council has chosen to raise taxes, but people should be surprised at the dreadful choice of tax the council has made. Instead of a tiny hike in a broad-based tax that most people in the city pay, it has chosen to violate every principle of sound fiscal policy by raising taxes on specific unhealthy products. Of course, this idea isn't unique to Santa Fe. Many local jurisdictions believe they can get away with a misguided tax on fatty or sweet food by exaggerating the extent to which it will change people's behavior: making obese people fit, cutting the rate of tooth decay, and so forth. Sound tax policy adheres to the principles of simplicity, stability, transparency, and neutrality. A specific tax on soda and other unhealthy products in order to fill a budget gap falls short on every one of these standards. Simplicity It may sound simple to tax unhealthy products, but if the city council sits down to define unhealthy, it will find out the same thing that other cities and states have found when they've tried: it's a nightmare of complexity. * Will the healthiness of a product be measured with some scientific, nutritional method? Is that calories, or sugar content, or fat content, or something else? * If, as suggested, soda is one of the products chosen, should diet soda be taxed less? Or perhaps not at all? Will meats and dairy foods-nutritious but fattening-make the cut? Would a snack-food tax targeted at ranch-flavored Doritos grant an exemption to fat-free pretzels? A cynic might say the city council's anti-obesity rhetoric is just cover for a money grab, but what if it isn't? A soda tax will certainly not significantly change the weight of city residents, so what will the council do then? Raise more taxes? Mandate exercise? Some jurisdictions are offering tax

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