Acton Commentary

The Flawed Fast Food Tax


As politicians look for new ways to prop up their sagging budgets, Detroit mayor Kwame Kilpatrick is the latest political figure to float the idea of a “fast food tax.” If his effort is successful, Detroit would become the first city in the nation to pass an extra tax on quickservice food.

In Kilpatrick's proposed city budget , a 2 percent tax on fast food “means if a Happy Meal costs $2.99, the total cost will be $3.05, with the six cents coming to the city.” The Detroit Free Press editorial page even does Kilpatrick one better, suggesting that the government “tax take-out food statewide — but by calories, not cost.”

As one of the great examples of the American entrepreneurial spirit, fast food restaurants are under growing threats these days. The fast food tax, or “fat tax,” is really the newest incarnation of the age-old “sin” tax. The reasoning is that fast foods, which tend to be higher in calories, fat and cholesterol than other types of food, are unhealthy, and therefore worthy of special government attention.

Sin taxes have a long and checkered American history, with the most common sin taxes on liquor and cigarettes. But recently, other kinds of sin taxes have received attention, since so many governments at all levels are facing fiscal constraints. Some have suggested extra taxes on bars and strip clubs. This fast food tax promises to be much more far-reaching, however, as the National Restaurant Association estimates that domestic quickservice sales reached over $140 billion in 2004.

But why shouldn't the state attempt to promote healthy behavior through taxation? The moniker “sin” tax isn't really appropriate when applied to such things as food and drink. A Christian understanding of stewardship includes taking care of our bodies, but within that mandate is wide scope for prudential judgment concerning how to nourish ourselves and how to enjoy the licit pleasures of creation. As Thomas Aquinas writes, “Gluttony denotes, not any desire of eating and drinking, but an inordinate desire.”

But in this case, it is worth asking which is more gluttonous: the fast food consumers who order combo meals, or the governments, which constantly seek new ways to feed their own insatiable appetites. It's a shame that those who so often lament governmental attempts to “legislate morality” don't find anything wrong with the arbitrary taxation of certain legitimate industries and commodities.

In addition, the state's interest in promoting healthy behavior quickly becomes contradictory when sin taxes are introduced. If such activities really are so harmful, government should not have an economic stake in the continuance of such activities. Indeed, government budgets, in seeking the short-term crutch of sin taxes, can quickly become dependent on them for long-term viability.

And the fast food industry is really too easy a target for the government. Besieged by the media and public opinion (consider the popularity of the film Super Size Me), quickservice restaurants have gotten the reputation for being extremely unhealthy.

But the truth of the matter is more complex. The National Restaurant Association reports that two-thirds of quickservice restaurants have added low-carb options to their menus. As usual, the service industry responds quickly and efficiently to customer demands.

Burger King CEO Greg Brenneman recently said in a Wall Street Journal interview that he feels no pressure to respond to critics of the fast food industry. “You should be able to come to Burger King and get a healthy, low-calorie, low-fat meal. You can. Beyond that, I don't think it's my job to tell Americans what they should eat. We might as well go back to communism.” Have it your way, indeed.

Whether Kilpatrick's proposal is approved or not, it will ultimately fail because such a capricious tax on fast food will be met by a corresponding market force. In the words of 18-year-old Ebony Ellis in an AP report , “Just tell him we're going to go to Bloomfield Hills [a Detroit suburb] to McDonald's if he puts a tax on it.”

As a rule, governments should not seek quick and temporary fixes to structural budget problems. Sin taxes like the fast food tax are quick fixes that would have serious economic and moral consequences. Government leaders really ought to address their own appetite for spending tax dollars before they try to regulate the appetites of their constituents.