Research: More Evidence that Soda Taxes Work to Reduce the Consumption of Sugary Beverages

Excise taxes on specific products like alcoholic beverages and tobacco have been around almost as long as the nation itself.

Illuminate: "Excise taxes are a popular source of government funding at the state and federal level for a variety of reasons. They aren't always obvious to consumers because they are charged to the manufacturer or retailer and then passed along within the price of the product. Additionally, excise taxes are levied to accomplish a specific policy generally recognized by the public. They are often used to discourage a particular behavior [smoking, drinking], or to pay for specific public services like the gas tax to pay for roads and bridges."

Recently, several cities have passed "soda" taxes on sugary beverages to combat obesity and the rising incidence of type 2 diabetes. Some public policy experts questioned if fairly insignificant taxes on such beverages [a cent or two per ounce] would actually deter consumption. Researchers have been keeping a close eye on Philadelphia which passed its soda tax back in 2017. A new paper authored by experts from the University of Pennsylvania and published through the JAMA Network compared sugary beverage sales in Philadelphia to those in Baltimore which had not implemented a soda tax. They found that the tax on sugary beverages worked, maybe better than anyone had anticipated.

JAMA Network [Open]: "This cross-sectional study found that, 2 years after tax implementation, price audits of stores showed 137% of the tax was passed through to prices and bag checks indicated a 42% decline in volume of taxed beverages purchased in Philadelphia compared with Baltimore. ... These findings suggest a city-level beverage excise tax was associated with persistent declines in purchases of sweetened drinks and calories from sugar..."

There are at least two theories about why the excise tax was so successful at lowering consumption. The first is obvious; shoppers were deterred by the tax, by the increased cost of the products. That's probably true, but there may be another important factor. The publicity that led from the debate over levying the tax and its eventual imposition also highlighted the health aspects of the policy. Philadelphia residents heard quite a bit about the negative consequences of consuming too many sugary beverages while the residents of Baltimore did not. Might that have been an important factor in lowering consumption? Probably, but more research is needed.

More Research: A similar study of the impact of a soda tax in the UK found it too reduced the consumption of sugary beverages. See: "Consumption of sugar from soft drinks falls within a year of UK sugar tax"

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By: Don Lam & Curated Content