Sugar-Sweetened Beverages Taxes – Sweet or Bitter?

By Ruyu Liu, MS, RD

According to the CDC, the prevalence of obesity among adults in the US has increased from 30.5% in 2000 to 42.4% in 2018. Obesity is a serious public health concern that burdened the US health care system $147 billion in 2008. Sugar-sweetened beverages (SSBs) are the single largest source of added dietary sugar in the U.S. and their frequent consumption has been associated with chronic diseases like obesity, type 2 diabetes, heart disease, kidney disease, non-alcoholic liver disease. Indeed, the over-consumption of SSBs can lead to not-so-sweet health outcomes. SSB consumption is also associated with more sedentary time, lower fruit and vegetable intake, and higher fast food intake. The USDA suggests limiting added sugar intake to less than 10% of total daily calories. In other words, added sugars should only contribute around 200 kcal of a 2000 kcal diet. To put those numbers into perspective, a 16 oz Monster Energy drink has 13.5 teaspoons of sugar and is worth 200 kcal. 

Drawing from the success in tobacco taxation, SSB taxes, also known as soda taxes, have been introduced to decrease their consumption. There are several kinds of taxes. One type is the sales tax which is collected from consumers when they purchase an SSB. For example,  a 15% sales tax means consumers are charged an extra 15% of the original price. Another popular taxation approach is an excise tax. Excise tax is based on either the volume of the beverage (e.g. $0.02 per liter) or the sugar content (e.g. $0.05 per gram of sugar) of the beverage. The government charges the merchants and retailers these excise taxes, which often lead to an increase in the retail price. The goals of SSB taxation are 1) to reduce SSB consumption and 2) to generate revenue for use in health equity programs. Additionally, the taxation might provide incentives for manufacturers to reformulate SSBs with lower sugar content.

SSB taxes have shown promise in reducing consumption since their introduction. In 2014, the city of Berkeley, California became the first city in the U.S. to implement SSB taxation. The legislation required a $0.01-per-ounce excise tax on SSBs, such as soda, energy drinks, sports drinks, sweetened water, coffee, and tea. Researchers from the University of California (Berkeley and San Francisco) found a 21% decrease in SSB consumption over a 1-year period in low-income neighborhoods. Further, the decrease in consumption was sustained three years after the introduction of the SSB tax. Following the success in Berkeley, many other cities started implementing SSB taxes, including Albany (CA), Oakland (CA), Philadelphia (PA), Boulder (CO), San Francisco (CA), Seattle (WA), and Washington D.C. To take a deeper look at the impact of the SSB taxes on a global scale, a systematic review and a meta-analysis published in 2019 examined 18 studies worldwide (e.g. Chile, Mexico, and the US)  that investigated the purchases and intake of SSBs as a result of the taxes. The study found a decrease in sales, purchases, and intake of taxed beverages. Specifically, a %10 SSB tax is associated with a 10% decline in SSB volumes and a 1.9% increase in untaxed beverage purchases and intake.

Despite the reported successes of SSB taxation, it is not without criticism and controversies. Since one of the key rationales behind SSB taxation is to reduce obesity and obesity-related chronic diseases, some voiced their concerns over possible stigmatization and discrimination against individuals who are overweight or obese. Researcher Jennifer Falbe, from the University of California Davis, argued that SSB taxes should target the SSB industry and manufacturers, instead of individuals. The increase in retail price is not to put the blame on consumers, but rather, to urge the industry to take on more responsibilities for public health. Another criticism, mainly voiced by the beverage industry, focuses on the potential job loss due to SSB taxation. However, this claim has not been backed up by statistics. The investigations on the impact of SSB taxes on employment in Pennsylvania, California, Illinois, and Mexico found no change in unemployment claims after new taxes were implemented. Finally, some opponents find this taxation to be financially regressive. In other words, individuals with low-income might be disproportionately affected. A review article published in 2016 examined five studies that investigated the amount paid in SSB taxes by households. The results showed that lower-income households pay a greater proportion of their income in SSB taxes. However, it is worth noting that the differences in the amount paid due to the taxation across all income levels are small, approximately $5 per year. The small additional expenditure is not sufficient to oppose SSB taxation due to regressivity. Further, Dr. Falbe pointed out that low-income and historically marginalized populations are disproportionately exposed to more SSB advertisements, and have a higher prevalence of obesity and obesity-related chronic diseases. One study showed a higher reduction in SSB purchases among low-income households than the general populations in Mexico after SSB taxes were introduced.

SSB taxes have shown promise in reducing SSB purchases and dietary intake. However, this legislation faces tremendous resistance from the beverage industry, as well as from politicians and the general public. More research is needed to evaluate the implications of the taxation in health equity and long-term health outcomes.

Peer-edited by Erin Coffman, PhD Candidate in Nutrition

Picture credit: Zuriela Benitez on Unsplash

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