Muhtar Kent, CEO of Coca-Cola
We have all heard of cigarettes being taxed, but have you ever thought that sodas could be taxed? It is an idea that Congress and President Barack Obama are considering. Obviously, Coca-Cola is against this proposal. The CEO of Coca-Cola wrote "Coke Didn't Make America Fat" regarding this topic.
The CEO states that since the 1970s, the average caloric intake due to sodas has decreased by 25% thanks to products like Diet Coke and Coke Zero. There are two states (Arkansas and West Virginia) who already have tax on sodas, and they have the highest rates of obesity in the nation. This tax doesn't seem to be very effective there... so why would it be effective everywhere else?
What is happening here is just another way for the government to find a way to justify a tax and they know that this industry is one of the most successful at a 37.6% (Average ROIC-return on investment capital) and they are jumping on it.
ReplyDeleteIt is certainly a way to raise revenue. I am mixed about the tax -- I don't think it will cut into soft drink manufacturers profits; but that said -- I agree with Wes, it probably won't be effective. It is also a regressive tax -- it affects the poor disportionately, I don't like that.
ReplyDeleteCoke's response is weird though - diet soft drinks have their own problem -- cavities from the acid, and links to obesity-- he should have touted Dasani (or is it Aquafina, never can keep those straight).
Dasani is the Coke product. I definitely agree with both of you. I'm not sure it'll be effective, but I guess only time will tell...
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