Muhtar Kent, CEO of The Coca-Cola Company (NYSE: KO), took to the pages of The Wall Street Journal to argue against the government's proposed "fat tax" on soda. In a column titled "Coke Didn't Make America Fat," Kent noted that "our industry has become an easy target in this debate." However, he believes the sedentary lifestyle of Americans is to blame for our nation's obesity problem.
"If we're genuinely interested in curbing obesity, we need to take a hard look in the mirror and acknowledge that it's not just about calories in. It's also about calories out," wrote Kent. He also cited the "regressive nature and inherent illogic" of trying to rectify obesity by taxing soft drinks, observing that West Virginia and Arkansas -- two states which currently tax sodas -- are among the states with the highest obesity rates in the nation.
Kent didn't stop there, though. The CEO also played the economy card, asserting that, "Policy makers should stop spending their valuable time demonizing an industry that directly employs more than 220,000 people in the U.S., and through supporting industries, an additional three million."
Naturally, Kent has an understandable bias against a soda tax. But it's not necessarily appropriate to dismiss his argument out of hand as the indignant ravings of a soda CEO. Back in my days as an NYU undergrad, Mayor Bloomberg's sin taxes pushed the price of a pack of cigarettes well beyond my budgetary reach. Did I quit smoking? Well, yes, but not until several years later. Instead, I tapped into my American ingenuity and started rolling my own (unattractive, unfiltered, more than slightly shameful) cigarettes.
I imagine many cash-strapped soda fans would simply do the same if a soft drink tax were rolled out nationwide. Rather than trading their Cokes for spring water and spinning class, they would simply trade down to generic and lower-priced brands of cola. In other words, the tax wouldn't have much effect other than to negatively affect sales at several major U.S. corporations.
On the plus side, I anticipate that a new soda tax could potentially spark a grass-roots trend. If the government pushes too hard with its "anti-obesity" tax campaign, I predict that Coke parties could become the new tea parties.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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Reader Comments (Page 1 of 1)
10-08-2009 @ 1:31PM
kpinvest said...
Raise taxes on soda, lower taxes on tobacco. Why only punish smokers? Start taxing all caffeine heavily: coffee, tea, and sodas.
Now that would bring some income to Uncle Sam.
10-08-2009 @ 2:46PM
thedude said...
This just illustrates how incredibly ignorant your elected officials are these days. I say "your" because due to a serious lack of qualified individuals I refuse to vote anymore. When your choices are Scumbag A or Scumbag B that is not really much of a choice.
How about extreme taxing on video games. Say 100%. How about taxing telvision viewing (maybe $10.00/ hour)
I don't own any video game consoles and I am not obese( or even marginally overweight) My sisters family owns probably 4 different consoles and they are all pushing obesity. By contrast I probably consume more sugary beverages than her entire family combined. Although I am sure it is purely coincidence that I have an active lifestyle. Hiking, Kayaking, some Urban Adventuring (read: clubbing)
My personal source of caffeine and sugar is Pepsi (not a big fan of Coke)
US citizens need to redefine the criteria for political candidates and demand they find ways of reducing spending rather than going to extreme lengths to raise capital so they can increase spending. ANY politician who votes YES for any new tax should be declared guilty of treason against the citizens of the US and be hung by the neck until dead.
Funny anecdote: I remember the coke parties of the late 70's to early 80's and I don't think there were any soft drinks available at them. Also somewhat ironic that "tea" used to be slang for marijuana.
10-08-2009 @ 3:46PM
hugov said...
Stop trying to scare people. The government is spending money. With less jobs and less industry there are less tax revenues. Everyone is screaming for less taxes which means less revenues and more deficit. The government needs to increase taxes and why not on things we don't need. The question is how much. A few cents more for soda, candy, cigarrettes, alcohol, fast food, etc will not kill those industries. Our fat Americans will continue to consume them.
10-08-2009 @ 5:22PM
azianeddie said...
I think this is a terrible idea. It's the same thing like that igonorant lady suing Mcdonalds over making her kid fat...i'm sorry but that's her own damn fault....nobody is forcing her to take her kid to Mcdonalds and nobody is forcing americans to consume Coke....it is by choice and in essense our fault....we do need to look in the mirror and reevalutate our own lifestyles and food choices...Time to start taxing all fast food, polysaturated fat....blah blah blah