The Benefits of Junk Food
Waist banned, the article that was published in the July 30 2009 edition of The Economist, questioned the sagacity of imposing taxes on items that “do not reflect the true social cost of their consumption” (Waist banned 1), such as alcoholic beverages, cigarettes, and gambling. While it is true that the government is able to create enormous revenues from these consumer goods, with estimates reaching over $500 billion in a ten-year period, it is also clear that this method can not assure a healthier populace.
Based on several studies that were discussed in the said article, it is clear that in total contradiction to its claim and purpose, taxing these unhealthy items in hopes of altering the lifestyles of their patrons tended to have effects that are detrimental to the health of the target group. In particular, there is an increasing clamor to impose heavier taxes on junk foods, such as on sugary drinks.
This can be evidenced in the proposal of Urban Institute to impose “a 10% tax on fattening food of little nutritional value” (Waist banned 1). However, several studies, such as the ones done by the Journal of Public Economics, the National Longitudinal Study of Adolescent Health, and the America’s Health and Retirement Survey, strongly suggest that these measures will only prove to be absolute failures, as respondents seemed to be unaffected by the ill-effects of these consumer items.
Lastly, the general perception of externality being the root and sole cause of the problem created by the correlation between junk food and obesity was debunked in this article, “as BMI, the ratio of weight in kilograms to the square of height in meters …if imperfect, gauge whether someone is over- or underweight” (Waist banned 1). Change in Supply and Change in Quantity Supplied The article in discussion, Waist banned: Does a tax on junk food make sense?
, being one that borders on taxation, naturally is inherent of certain principles that encompass economics. This can either be based on the proposed imposition of taxes that will undoubtedly result in higher prices, or in the apparent neglect of consumers to be wary of the health hazards that junk food causes. Either way, what is certain is the effect that the said taxation will cause in relation to the precept of supply and demand, particularly on how the market forces will react to the perceived changes in sales.
Evidently, if and when the American Congress enacts the provision to impose taxes on sugary drinks, which aims to “help pay for the planned expansion of health-care coverage” (Waist banned 1), a resulting effect of a Change in Supply will have to be expected. Although it would not be a result of a technological innovation or an increase in the number of competitors that will cause to greatly increase the rate of production, the new tax scheme will nonetheless result in a similar result.
This can be based on the seeming neglect of the American consumers to be conscious of the health dangers that these type of drink offers, irrespective of its price in the market. The article had been very clear on this, as it observed, “The biggest consumers of fattening food may prove similarly resilient to price increases” (Waist banned 1). This is true especially for those belonging to the lower social strata of the financial hierarchy, where a choice between healthy yet expensive food and cheap junk food is quite easy to make.
The very fact that the Urban Institute has estimated this taxation “would raise $500 billion” (Waist banned 1) in a relatively short span of ten years is suggestive that they expect the sales of sugary drinks to be unaffected by the price increase. Contradictory to usual occurrences, this change in the prices of products might prove to be the main reason for an increase in the Change in Quantity Supplied. Personal Reaction
In aiming to impose additional taxes on sugary drinks, especially since these goods are already taxed by the government before they can even be sold in different commercial establishments, perhaps it would be wise to first question the real reasons for this proposal. Based on the arguments presented by The Economist, it truly seemed correct that at least “in theory, governments can make up these costs, or externalities” (Waist banned 1).
This particular observation made by the article causes resentment, as I believe everyone must be given his equal choice on products that he deems appropriate for his consumption. Likewise, targeting a specific set of consumers as sources of additional taxes would seem erroneous, especially if there are other ways for the government to reach their annual revenue goal. The aforementioned article also was able to influence a feeling of hopelessness, especially with the line, “so a fat tax may do little to improve health, at least for today’s junk-food addicts” (Waist banned 1).
Based on this argument, it would indeed seem that the introduction of this tax scheme is absolutely pointless if we were to rely on its main purpose, which is to improve on the health of the general populace, especially the youth who are most fond of junk foods, and that it only serves the self-serving purpose of maximizing the government’s tax collection at the expense of the youth.
Another unpleasant reaction that affected me in reading the article in discussion is the feeling of the entire tax scheme as being a useless waste of time and effort, especially in the findings of the Journal of Public Economies, “that a tax on junk food could increase obesity, especially among physically active people” (Waist banned 1).
If this finding were indeed correct, then truly all of these will be a total waste of energy, as this tax scheme that was purportedly designed for the betterment of our health is the very same scheme that will be the cause for our health’s disintegration. Work Cited Waist banned: Does a tax on junk food make sense? TimesFirst. com. 30 July 2009. 30 May 2010 <http://www. timesfirst. com/trade-news/203379/Latest-Starbucks-Buzzword-Lean-Japanese-Techniques. html>
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