Sweet New Evidence On Beverage Taxes

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​Joshua Petimar, ScD, PhD

Countries around the world – from small nations like Fiji and Vanuatu to huge ones like India and Mexico – are increasingly implementing taxes on sugar-sweetened beverages (SSBs) in an effort to improve diet quality and reduce rates of chronic disease. SSBs, which include sodas, iced teas, energy drinks, and other beverages with added sugar, are an understandable target for an excise tax; they are strongly associated with poor health outcomes (such as obesity, diabetes, and dental caries), and they consist of “empty calories” that reduce feelings of satiety. While the U.S. isn’t one of the 30+ countries to levy an SSB tax, several US cities have now done so. And, results are coming in.

The latest major study on SSB taxes examined the effects of a 1.5-cent/oz tax on sugar-sweetened and artificially-sweetened beverages in Philadelphia. The tax went into effect on January 1, 2017 and appeared to have a huge effect – compared with sales in Baltimore, a city with a similar population to Philadelphia but without a SSB tax, the total volume of taxed beverages sold in Philadelphia decreased by 51%. The decrease was about the same for both sugar-sweetened and artificially-sweetened beverages. All beverage sales increased in ZIP codes that border Philadelphia, suggesting that some people left the city to purchases some of their drinks. This means that the total impact of the beverage tax was a 38% reduction in the volume sold, a still impressive population-level impact on SSB purchases.

​Philadelphia is the largest city in the U.S. that currently has an SSB tax, but some version of a tax has been implemented in California (Albany, Berkeley, Oakland, and San Francisco), Colorado (Boulder), and Washington (Seattle). Of these, only the taxes in Philadelphia and Berkeley have been evaluated. The 1-cent/oz tax on SSBs in Berkeley was associated with a 10% decrease in volume sales, although there was a 7% increase in SSB sales in neighboring cities. Reasons for the stronger results in Philadelphia are unclear, but possible reasons may include that in Philadelphia, the tax was higher, more of it was passed onto consumers, and more residents live below the poverty line than in Berkeley. Reduced SSB sales have also been observed in other countries that have passed SSB taxes, such as in Mexico and Chile.
 
So if SSB taxes are successful in reducing consumption of SSBs (not to mention the revenue they generate for cities), why aren’t they more popular in the U.S.? First, and perhaps least surprisingly, they are being met with intense resistance from the beverage industry, which spends millions of dollars on ads, lobbying, and political contributions to defeat these policies, as it did in Chicago in 2017. Second, SSB taxes are regressive at face value – they affect the poor disproportionately more than the wealthy, especially because the poor consume more SSBs than the wealthy. However, once you factor in the potential indirect benefits of reduced SSB consumption, including reduced costs associated with chronic disease management and insurance premiums, the poor may stand the most to gain from these taxes in the long run. Furthermore, the revenue generated by SSB taxes is frequently earmarked for public health initiatives, like nutrition and childcare programs, and could be used to subsidize healthier foods (like fruits and vegetables) that are expensive but necessary for an optimal diet. Lastly, some opponents have argued that SSB taxes will have adverse effects on employment, although this doesn’t appear to have been true in Philadelphia.
 
Will these new results convince other cities to implement SSB taxes? And, will these results be replicated in other cities with new SSB taxes? We’ll have to wait and see. In the meantime, regardless of whether there’s an SSB tax where you live, consider substituting water, coffee, tea, or diet beverages for SSBs for reduced weight gain and optimal health.