Various people have brought up the idea of a “soda tax”. The idea behind this is that by adding a tax to sugary drinks this will help fight obesity in today’s youth, raise funds to pay for health-care, and cover budget shortages. While this tax is being touted as the savior of all our troubles, one has to ask; how will consumers respond.

There’s no doubt that America has a problem with obesity. A study by the National Center for Health Statistics from the CDC found that 17.1% of children and adolescents between 2-19 years were overweight. That same study also found that 32.2% of adults were obese. While there are claims that soda plays a big part in America’s obesity, there are many factors that lead to overeating. Food manufacturers over the years have added more food to their products, the Triple Baconator from Wendy’s anyone?

The American Public Health Association (APHA) says that a soda tax could raise $16 billion annually by taxing one cent per ounce on sodas. The Congressional Budget Office said that a tax of three cents per 12 ounces would generate $6 billion a year to help fund the health-care reform.

One question is if the tax would even raise the money various parties claim it would raise. Looking at the two possible time lines, the short run and the long run, would this have any impact on the government’s coffers?

If a tax of one cent per ounce were to be implemented, a 24-pack of your favorite name brand soda would go from around $9 to almost $12. The majority of soft drink consumers tend to be low income families, where a price increase of $3 is a substantial amount. This could affect the amount of soda purchased by consumers, upsetting the supply and demand economy for sodas, and other sugary drinks.

In the short run, the time immediately after this tax is imposed, I believe the tax would seem to be working. People wouldn’t have enough time to react to the price change, and would continue to buy their normal amounts of soda. However, as time goes on, individuals will become aware of the increased prices and would no doubt start to consume fewer sodas because of their increased cost.

In the long run, soda manufacturers would no doubt try to re-engineer their sodas in an effort to find a loophole in the soda tax. They could switch to non-sugar based sweeteners and be classified in different categories, areas exempt from the soda tax. For consumers, they would find alternative drinks that are more affordable than the heavily taxed sodas.

A lower demand for soft drinks due to higher prices from the soda tax would force the soft drink manufacturers to readjust their strategies for producing sodas. They would not be able to sell the same amount as they had been because of the lower demand, thereby cutting their potential income and possibly even putting smaller soft drink producers out of business.

The soda industry as a whole would also undergo a change in their methods. As the tax would only apply to sugary drinks, a lot of drinks could be sweetened with honey, agave, or something entirely different. The costs to the soda industry to begin research into new technologies would raise the costs of production; possibly even raising the price of soda even more.

Looking at the other goal of this soda tax, decreasing obesity, you have to wonder if a tax could even accomplish such a goal. The thinking being that increased cost would result in fewer sodas being consumed. This is supposed to cut obesity? Soda is not the only reason Americans are overweight. The fast paced world where we work and live on the go is not a healthy way to lead a life. Fast food is convenient, and some incredibly unhealthy. Fast food restaurants would no doubt subsidize the affects of this soda tax, offering their meals with only a slight increase in price. A family may not buy as many 24-packs of soda, but I doubt the tax would affect how often they eat out, or how often they exercise.