Why Pop May Become the New Tobacco

Pop is fizzling. Declining sales, the stumbling of Coke's latest campaign suggesting exercise is the key to indulgence, and the push to tax soda to suppress consumption are big warning signs for the industry.

Let's talk taxes. Taxation has many uses as a tool of policy making. They can be employed to provide incentives for and to impose disincentives upon a myriad of activities: investing in certain equities, saving for retirement, supporting the rearing of children, and so forth. Excise taxes are especially relevant in regulating consumption. Generally speaking these taxes are imposed upon specific goods and services (as opposed to, say, retail sales taxes that apply generally). Excise taxes can have several objectives: one is to discourage consumption. Because of their targeted nature, these taxes can be levied on almost anything where it has determined there should be less consumption (think alcohol and tobacco).

Enter the junk food tax.

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