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Pay up for that Pepsi

Instead of a blanket hike on VAT, a targeted tax on fizzy drinks could raise money and save lives

The idea is alive and living in New York state. Sugary canned drinks ruin your teeth and make you fat. Therefore, like everything else that palpably hurts health, they should attract extra taxation: say one penny per ounce, around 20% more on a 75-cent can of sweet soda. Of course the notion isn't universally popular. Fox News is against, as it is against almost every policy supported by Barack Obama. But at least nobody can sing the "pain" song too easily. You can't talk pain over a swig of Pepsi. One reason, perhaps, why Alistair Darling should get interested.

Is VAT going up to 20% under whoever rules the Treasury next? It's a solid, sullen bet. Yet why use this tax as a blanket impost, unrefined, oblivious to health or environmental imperatives, when a little fine tuning shows the way?

We know "food of a kind used for human consumption" is zero-rated – but we also know that too much human consumption leads to an early grave. We acknowledge that in the rising price of beer and cigarettes, yet there the logic of cost and constraint runs out. You can wade through the minutiae of the VAT rules for hours without ever encountering an argument a doctor might salute.

The inspectors standard-rate crisps, fizzy drinks, ice cream. But tortilla chips, milk shakes, frozen yogurt (if it melts) escape scot-free. A bottle of mineral water rakes in 17.5%; a jar of prunes in armagnac takes nothing on top.

Maybe, at first sight, a taxing obsession with chocolate in every shape or form has keeping fit somewhere in its rationale. Expect standard rate on "biscuits wholly or partly covered in chocolate or some product similar in taste or appearance" – except "chocolate chip biscuits where the chips are either included in the dough or pressed into the surface before baking".

In fact, though, health takes a back seat the moment you find that spreading caramel all over shortbread attracts no charge, that chocolate chips to sprinkle on cakes come duty free (unlike chocolate buttons), that Bourbon biscuits with chocolate cream in the middle pass no-taxation muster. Health really isn't an issue in any of this introverted detail.

When I wander down to a supermarket and pick up a lunchtime chicken sandwich shot through with salt and saturated fats, the VAT man looks the other way. When I reach into the chiller cabinet and pull out a pizza or a packet of burgers, then the needs of "human consumption" have the last word. Frozen mousses, toffee apples, prawn crackers ... welcome to the club. But don't confuse standard-rated ice cream wafers with zero-rated communion wafers, or you'll end up in the mire.

Any bureaucratic list built up over decades is open to ridicule, perhaps. But the disconnect between public policy and current concern right along the VAT chain is painfully clear. (And not just on the edible side either: Britain's reluctance to put a "tax on knowledge" – ie books, newspapers and magazines – means that all those lads mags and porn specials escape tax; under cover, presumably, of what Richard Desmond might call a "tax on carnal knowledge".)

But let's not worry about no VAT on bingo club memberships and houseboat moorings, for the moment. There will always be another budget to clear up the peripheries. Let's stay with Mayor Bloomberg of New York, talking soda taxes in a city where nearly 40% of school-age children are overweight, with "diabetes, heart disease, asthma and depression" lying in wait. Let's save many more lives than any new drink-driving purge. Let's send hundreds of millions more to our Treasury in the best of all possible causes – one where personal gain trumps minimal pain.

For, as those self-same VAT regulations conclude: "Burial or cremation of dead people – exempt."

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