A new study suggests taxing sugar instead of soda is a more effective way to help people cut calories.
The issue: In the midst of a nationwide obesity epidemic, several cities and counties have begun levying a new tax on soda and other sugar-sweetened drinks. In early 2017, for example, Philadelphia introduced a 1.5-cents-per-ounce “soda tax” to encourage residents to make healthier beverage choices and raise money for local preschools. In August 2017, shoppers in Cook County, Illinois, started paying a penny-per-ounce tax on sweetened drinks. Many other communities are debating the issue.
But does taxing soda really discourage consumption? A new study looks at whether taxing sugar, fat or salt might be a more effective way to get people to cut back on unhealthy foods than taxing specific products.
A study worth reading: “The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes,” published in the Journal of Health Economics, 2017.
Study summary: Matthew Harding of University of California-Irvine and Michael Lovenheim of Cornell University examine how price increases affect food-buying habits and personal nutrition. The authors simulate a 20 percent tax on products such as soda, sugar-sweetened beverages, packaged meals and candy and snacks. For comparison, they also simulate a 20 percent tax on foods and drinks containing salt, fat or sugar.
As part of the study, Harding and Lovenheim analyze more than 123 million food-purchase transactions from a variety of stores in 52 geographic markets between 2002 and 2007. They rely primarily on records from the Nielsen Homescan Panel, which collects details on grocery purchases made by a representative set of consumers.
Key takeaways:
- Higher-income households buy more fruits, vegetables, snacks, candy and packaged meals while lower-income households buy more soda, meat and milk.
- Taxing sugar, fat and salt has a larger impact on consumer nutrition than product-specific taxes. For example, a 20 percent tax on soda reduces sugar consumption by 10.35 percent but only cuts overall caloric intake by 4.84 percent. A 20 percent tax on sugar cuts sugar consumption by 16.41 percent and reduces caloric intake by 18.54 percent.
- Taxes on snacks and packaged meals have little impact on nutrition.
- Taxes on fat result in a 19 percent reduction of total calories consumed. A 20 percent tax on salt decreases calories 11 percent.
- Sugar taxes are especially effective at encouraging healthier purchases. “Sugar in particular is highly prevalent in American foods. Taxing these nutrients does not allow consumers to substitute to other goods that also contain these nutrients. Rather, they shift to healthier products and decrease overall consumption.”
Other resources:
- The U.S. Centers for Disease Control and Prevention (CDC) provides a variety of reports and data on sugar-sweetened beverages and consumption habits.
- Groups that advocate for sugar-sweetened beverage taxes include the American Heart Association, Bloomberg Philanthropies and the Center for Science in the Public Interest. Some groups that oppose soda taxes are the American Beverage Association, Pennsylvania Retailers Association and the Illinois Coalition Against Beverage Taxes.
- The University of Connecticut’s Rudd Center for Food Policy and Obesity helped develop the Revenue Calculator for Sugary Drink Taxes, which can be used to estimate revenue from excise taxes on sugary drinks.
Related research:
- A 2017 study published in the American Journal of Preventive Medicine, “Sponsorship of National Health Organizations by Two Major Soda Companies,” finds that Coca-Cola Company and PepsiCo sponsored 95 national health organizations but also lobbied against 29 bills and proposed regulations aimed at reducing soda consumption or improving nutrition between 2011 and 2015.
- A 2016 study in the Journal of the Academy of Nutrition and Dietetics, “Added Sugars Intake Across the Distribution of US Children and Adult Consumers: 1977-2012,” suggests a significant increase in sugar consumption among children and adults between 1977 and 2003 and then a large drop from 2003 to 2012.
- A 2015 report in the American Journal of Public Health, “Higher Retail Prices of Sugar-Sweetened Beverages 3 Months After Implementation of an Excise Tax in Berkeley, California,” looks at how drink prices changed in and near Berkeley, California, after the city adopted a 1-cent-per-ounce excise tax on beverages sweetened with sugar in 2014.