• Taxing sugar sweetened beverages

    Long time readers know I think that the prohibition against soda in New York City isn’t great policy. I’ve been more hesitant to come out strongly against a tax against sugar sweetened beverages. Sure, there are examples of how such taxes fail, but I don’t think that taxing things is as bad as prohibiting them. A study was recently released that modeled the effects of such a tax. “Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered“:

    Using the 2006 Homescan panel, we estimate the changes in energy, fat and sodium purchases resulting from a tax that increases the price of sugar-sweetened beverages (SSBs) by 20% and the effect of such a tax on body weight. In addition to substitutions that may arise with other beverages, we account for substitutions between SSBs and 12 major food categories. Our main findings are that the tax would result in a decrease in store-bought energy of 24.3 kcal per day per person, which would translate into an average weight loss of 1.6 pounds during the first year and a cumulated weight loss of 2.9 pounds in the long run. We do not find evidence of substitution to sugary foods and show that complementary foods could contribute to decreasing energy purchases. Despite their significantly lower price elasticity, the tax has a similar effect on calories for the largest purchasers of SSBs.

    Unfortunately, the paper appears to be gated. The take home findings, however, are that a tax on sugar sweetened beverages that increased the price by 20% would result in a decrease in calorie consumption that would lead to a weight loss of almost 3 pounds over 10 years. This study was novel in that it accounted for changes in other foods, as well as sugar sweetened beverages, in documenting the effects of the tax.

    Now we can debate how valuable 3 pounds of weight loss is. We can also debate as to whether a 20% tax is politically feasible. But at least it appears that a tax might produce some results. Fighting obesity is so difficult that sometimes I despair that anything would work. I also appreciate the addition of evidence to this debate.

    But if you’re asking my opinion, I think that any implementable tax would likely not yield results that would make a difference in the real world. We need a holistic solution. Keep working.


    • While I am sceptical taxing a food group can generate change there is a lot of evidence to support that it can influence populations to change. Denmark continues to be a great example. I was listening to Washington Chronicles on Saturday January 5th and they discussed the Countries decision to reduce it dependence on Oil after the Oil embargo of the late 70’s. They supported and developed the technology for wind energy, they now are the leaders in this innovation funding was made available by the taxation of fuel energy. Gas at this time is around $10.00 per gallon. One of the unintended benefits is the usage of bicycles as a mode of transportation. This improves the over all health of this country.

      While this example of taxation did allow for real healthy change, Denmark has repealed their fat/sugar tax when it was found that they were crossing the border to get their fix.

      I would favor tax credits for people who demonstrate by changes to their daily activity more realistic. If you could get a tax credit for pedaling or walking to work I am all for it.

    • Another issue is the availability of non-sweetened drinks as alternatives. Over here (Japan) the machines have green tea and some artificially sweetened drinks as well as the high-sugar drinks. I suspect that there’d be resistance in the US to a tax policy that forced people to drink artificially sweetened things if they were the only drink options, unfortunately.

    • Finland implemented a sugar tax on candy, drinks and ice cream in 2011. In 2014 the government will add cookies, cakes and other baked goods. Possibly also other stuff with high sugary content, such as yoghurt.

      Recently the latest Finrisk study showed that the percentage of overweight adults (25-64 years) had stopped increasing, and actually fell from 50% to 46% among females. They give various reasons for this development, but it’s hard not to think the sugar tax plays a role. On the other hand the previous Finrisk study was done in 2007, so it’s too early to draw any definitive conclusions about the effects of the tax. We’ll have to wait and see what other surveys reveal.

    • While a tax on SSBs might have minimal results by itself, it gives local governments an opportunity to generate additional money to create anti-obesity and anti-soda campaigns. Some of the early SSB tax proposals have not passed partly because the money raised from the tax would have been distributed too broadly.

      There is a good argument to support a SSB tax at a city or county level as local government has been advocating for a farm bill that supports consumers making health food choices. However, a national SSB tax seems odd considering that the USDA subsidizes corn which is turned in to high fructose corn syrup (a main ingredient in SSBs). Ending subsidies and creating a free market is a logical choice. Also, prohibiting the sale of SSBs to food stamps recipients would end a second subsidy that soda companies enjoy.

      Another option would be to subsidize fruit and vegetables so that expensive fruit smoothies were prices to compete with Coke and Pepsi-both of these brands also make healthy fruit drinks so there is some possibility that they would support changing the subsidies as long as they can keep their snouts in the government trough and generate sizable profits.