Sin taxes are regressive and don't work - Mike Bloomberg

Mike Bloomberg is on a mission this year to tax us out of life's simple pleasures. He has his billionaire fingers in a lot of pies. In addition to his pressure group Vital Strategies, he has recently set up the Task Force on Fiscal Policy for Health with the likes of Nicola Sturgeon and Margaret Chan on the board and has founded something called STOP (Stop Tobacco Organizations and Products) with a further $20 million. His finger prints were all over last month's special edition of the Lancet which was devoted to sin taxes and he continues to spend a king's ransom lobbying for soda taxes in the USA and elsewhere.  

He also has his own media empire, of course, which comes in handy. This article by 'the editors' of Bloomberg News expresses views that are uncannily similar to those of its proprietor.

Governments everywhere should tax sugar tax to persuade people to cut back. (Bloomberg Philanthropies has supported efforts around the world to pass sugar-sweetened beverage taxes.)

Though it’s too early to be sure that the taxes will save lives, they’re likely to, because they clearly steer people — especially lower-income people — away from added sugar. Critics argue that soda taxes are regressive; in fact, they’re paid largely by wealthier consumers and they mainly benefit the poor, who are more price-sensitive and suffer disproportionately from obesity and diabetes.

The link under 'benefit' is in the original article and it goes to an editorial in the aforementioned Lancet issue which argues that sin taxes are not really, actually, honestly regressive written by Larry Summers of Bloomberg's Task Force on Fiscal Policy for Health. What a small world. And that is only one of several Bloomberg News articles that takes this line.

There will be more to come because Bloomberg's Task Force will soon be releasing a list of recommendations with the title 'Saving Lives, Spending Less'. A line from the above article gives us a clue as to what might be in it...

The evidence so far confirms that they [soda taxes] change behavior, which suggests they should be applied as well to added sugar in foods.

This flurry of activity is designed to feed into the World Health Organisation's strategy on 'non-communicable diseases' with a view to getting governments to sign up to sin taxes on booze, tobacco, soft drinks and food at the UN High Level Meeting on Non-Communicable Diseases in New York in September.

The 'public health' lobby's focus on non-communicable diseases gives them carte blanche to regulate our lifestyles without end, as I wrote in 2012 when the WHO got politicians to sign up to its ludicrous target:

If 194 countries really have signed this quasi-treaty, you can expect to hear much more about our ‘legal obligations’ to control eating, drinking, smoking and - the mind boggles - ‘physical activity’ for many years to come. You may recall last year’s charming article from Jonathan Waxman in The Times titled ‘To avoid cancer, let the State dictate your diet’, which was itself based on the claim that lifestyles cause 40 per cent of cancer. That is only the start and it is, of course, why the puritans, bureaucrats, nannies and headbangers of public health are so keen on the idea of ‘non-communicable diseases’, because it gives them what every trigger-happy army general wants: a war without end.

There is something uniquely odious about one of the world's richest men campaigning for regressive taxation. Last month he was interviewed by Christine Lagarde at an International Monetary Fund event and forgot to take the new party line about sin taxes not being regressive. 

"Some people say taxes are regressive, but in this case - yes, they are. That’s the good thing about them. Because the problem is in people that don’t have a lot of money, so higher taxes should have a bigger impact on their behaviour and how they deal with themselves.” 

It's so gobsmacking to hear a billionaire openly admit that his thinks that sin taxes are good because they are regressive that it's easy to miss the smug paternalism at the end of the sentence when he talks about how people on low incomes don't know 'how to deal with themselves'.

Later in the interview he talks about the joys of bullying smokers. He claims that tobacco taxes are the best way to stop children - who are not allowed to buy tobacco - from smoking, but when it comes to adults...

"If you want to get older people to stop smoking, taxes have relatively little impact. It is the fact that you can't smoke in most places, so we have laws in most cities in America - you can't smoke in the workplace and you can't smoke in the restaurant and you can't smoke in the theatre. And pretty soon, if I can't smoke anywhere, I stop smoking."

That looks like a frank admission that smoking bans are not really about 'protecting' people from the secondhand smoke, but are paternalistic devices to pressure adult consumers into quitting. Who'd have guessed?

He then says...

"But adults will stop feeding their family before they stop feeding their addiction. They will find the money to buy cigarettes at almost any price."   

This is an argument for higher tobacco taxes?!  Perhaps he's hoping that if smokers stop feeding their families, obesity rates will decline even if smoking rates don't.

In conclusion, sin taxes on price inelastic products are regressive and are not effective at getting consumers to change their behaviour. You probably already knew that, but it's good to hear it from the horse's mouth.