[fighterpilot]

Sugar isn't an externality so it doesn't have the same justification as a carbon tax, you are right about that.

But, it's still significantly better than taxing productive work (the current system), which is why I support it so strongly. In my mind, it's not a question of whether the sugar tax is a great idea, it's a question of whether it's better than current taxes (due to the incentives it fixes). Unless externality taxes can fund the whole budget, we will need to branch out.

I don't like the contrast with fat since fat isn't known to be bad. See studies on olive oil consumption, or see studies on how the keto diet might help with chronic disease. Sugar is bad. Taxing sugar will save lives. I'd say the same for alcohol and cigarettes.

I also view this as somewhat important for a functioning society. Even though sugar isn't an externality per se, having a society full of sick people isn't conducive to its flourishing, and might have pretty bad unintended downstream consequences. If everyone is depressed and sick, might they vote for a populist autocrat, after being unable to put their finger on what exactly is wrong? See Hitler's 10x explosion of popularity one year into the Great Depression. This is a broad view of externalities which I pay mind to.

[mdbug]

Regarding sugar vs. fat: large amounts of saturated fats are known to be unhealthy. In small amounts, sugar can even be healthy, e.g. after exercise.

One problem with taxes on addictive substances is that they have little effect on consumption behavior. A higher tobacco tax makes smokers poorer, but only very few will smoke less as a result.

[fighterpilot]

> One problem with taxes on addictive substances is that they have little effect on consumption behavior.

Has this been studied? I get that we expect a lot of price inelasticity due to the nature of addiction, but I wonder how true that is.

One study[1] I'm reading now about a natural experiment on cigarette taxes. It worked a bit. There was an immediate decrease of 0.75% after the 25% tax was implemented, and it continued to decrease by 0.02% month-on-month afterwards (although part of that 0.75% decrease might be the existence of untaxed substitutes, and part of that 0.02% monthly decrease might be a global trend).

This[2] seems quite optimistic about taxes' ability to reduce demand. However, the data they share is not a nice natural experiment, so I don't put too much weight into it.

This one[3] is saying demand isn't inelastic at all.

This one[4] on sugar is saying a 10% price increase leads to a 13% reduction in demand.

> A higher tobacco tax makes smokers poorer

Yes, but an income tax makes workers poorer. I'd rather tax destructive behavior than productive behavior, as long as demand isn't too inelastic, given that we literally have to choose between them in order to raise sufficient revenue for the state. I admit that I should read more studies on exactly how inelastic it is before coming to a conclusion on that, though, but my cursory reading seems to support that it isn't overly inelastic.

> large amounts of saturated fats are known to be unhealthy

I wouldn't mind taxing that as well. I'm aware there's a point at which it becomes a bit too complicated, though. Start simple with sugar, alcohol and tobacco, and add other things like saturated fats based on the weight of evidence and whether it can be done simply and easily.

> In small amounts, sugar can even be healthy, e.g. after exercise.

Yeah. Similar to how alcohol might be healthy for people with heart disease. These are edge cases, and the tax will distort the market for these edge cases. But taxation is always a blunt instrument, and the broad alignment of incentives 99% of the time with a sugar tax is correct, unlike with a property tax (not a land tax) or an income tax where you get a misalignment almost all the time.

[1] https://www.thelancet.com/journals/lanpub/article/PIIS2468-2...

[2] https://www.who.int/tobacco/mpower/publications/en_tfi_mpowe...

[3] https://iris.paho.org/bitstream/handle/10665.2/31303/v40n4a0....

[4] https://bmcpublichealth.biomedcentral.com/articles/10.1186/s...