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Section Overview | Tax on Sugar-Sweetened Beverages
The Chronic Disease Division of the New Illabamafornica Department of Health reviewed 47 articles, including predictive models, systematic reviews, program evaluations, public perception, and policy- and news-related commentaries. We analyze four key articles (two peer-reviewed articles and two policy-related/commentary articles) below. Here we set those articles into broad context.
The literature generally supported taxes on sugar-sweetened beverages (SSBs): SSB taxes reduced purchase and consumption of those items across socioeconomic strata. In addition, some researchers suggest that SSB taxes as part of a more comprehensive approach may amplify the positive effects on obesity reduction and other health-related morbidities (Cobiac, Tam, Veerman, and Blakely, 2017). For example, an SSB tax combined with sugar, salt, alcohol, and tobacco taxes combined with subsidies for purchasing healthful foods may be most beneficial. However, we found several policy papers comparing the idea of a tax on SSBs to existing taxes on tobacco and alcohol. Those taxes not only have been important means of reducing consumption but also have generated significant negative responses from industry, antigovernment groups, and civil liberty–focused organizations (Wright, Smith, and Hellowell, 2017).
According to evidence from predictive models, SSB taxes could reduce obesity and prevent the loss of nearly 12,000 disability-adjusted life years (DALYs). Combining SSB taxes with a broader sugar tax might avert the loss of another 270,000 DALYs (Cobiac, Tam, Veerman, and Blakely, 2017). Models measured significant gains from health care savings achieved through reduced morbidity and mortality due to obesity and obesity-related conditions (Peñalvo, Cudhea, Micha, Rehm, Afshin et al., 2017; Veerman, Sacks, Antonopoulos, and Martin, 2016).
Because SSB taxation is a relatively new policy approach, the literature is just beginning to establish evidence that taxation programs are sustainable. Mexico passed a tax on SSBs in 2014. The Mexican program, as a case study and program evaluation, demonstrated not only a decrease in consumption/purchase of SSBs but also an increased purchase of water, addressing some critics’ concern that an SSB tax will simply shift demand to another sugary product. The case suggests that SSB taxation is a sustainable model (Colchero, Molina, and Guerrero-López, 2017; Colchero, Rivera- Dommarco, Popkin, and Ming, 2017). Initiatives in Australia, Germany, and the United Kingdom—and, in the United States, West Virginia and California—support that conclusion (Cobiac, Tam, Veerman, and Blakely, 2017; Schwendicke and Stolpe, 2017; Scalise and Young, 2017; Wetter and Hodge, 2016; Falbe, Rojas, Grummon, and Madsen, 2016; Tiffin, Kehlbacher, and Salois, 2015).
Some critics have suggested that an SSB tax is bad for businesses, particularly small businesses. Yet researchers have identified productivity gains in the private sector in locales that have taxed SSBs. Small-scale programs have been evaluated in multiple settings to determine the long-term impacts of an SSB tax, such as sustainable health benefits and worker productivity (Baker, Jones, and Throw, 2017; Le Bodo and De Wals, 2017; Roache and Gostin, 2017; Nomaguchi, Cunich, Zapata-Diomedi, and Veerman, 2017; Powell, Wada, Persky, and Chaloupka, 2014).
Any policy approach involving a fundamental coercive measure such as taxation demands particular attention to policy framing. The literature underscores that policy framing will shape industry reaction (such as, lobbying against taxes) (Hawkes, 2016; Blecher, 2015; Pomeranz, 2014). Equity is another central policy concern. Regressive taxes—that is, taxes that disproportionately burden people who can least afford them—inevitably raise the question of whether the risks outweigh the benefits (Backholer, Blake, and Vandevijvere, 2016; Sharma, Hauck, Hollingsworth, and Siciliani, 2014).
We highlight the findings from four articles and summarize the overall findings.
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Peer-Reviewed Article #1 Backholer, K., D. Sarink, A. Beauchamp, C. Keating, V. Loh, K. Ball, J. Martin, and A. Peeters. 2016. The
impact of a tax on sugar-sweetened beverages according to socio-economic position: A systematic review of the evidence. Public Health Nutrition 19(17):3070–3084. doi:10.1017/S136898001600104X.
Question: Will an SSB tax have the same impact on weight gain across socioeconomic strata?
Methods: A systematic review of the grey literature (included 11 articles).
Major Finding(s)/Argument(s): o Although the tax is slightly regressive, it “will deliver similar population weight gain
benefits across socioeconomic strata.” Indeed, some of the lower-SES (socioeconomic status) study populations benefited the most. Taxes on SSBs are often implemented to generate revenue rather than to improve health-related outcomes.
o The amount of the tax matters, but researchers disagree about how heavily the tax burden affects lower versus higher incomes.
o Improvement in health outcomes may outweigh any negative increased tax burden on the lower-income population.
o Evidence links consumption of SSBs to excess weight gain and other comorbidities. o In 2012, approximately 26.3% of U.S. adults consumed SSBs at least once daily.
Key Quotes: o “Individuals from socio-economic groups commonly consume more SSBs than their
higher socio-economic counterparts, potentially contributing to the observed inequalities in excess weight and associated disease.”
o “Recent evaluation of the tax [in Mexico] revealed a reduction in the purchase of sugary drinks of 12%, 12 months post policy implementation . . . the greatest declines were observed among households of a lower socio-economic position (SEP), with a 12-month decline in sugary drinks of 17% compared with pre-tax trends.”
Feasibility/Scalability: o Small number of studies, which limited the variability in study types. o The tax elasticity studies were limited by low tax rate variability and modeling
methods that relied on household survey, scanner data, and assumptions. o The studies reviewed don’t consider social norms, unintended consequences,
product substitution, and the response from the beverage industry.
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Peer-Reviewed Article #2 Cobiac, L. J., K. Tam, K., L. Veerman, and T. Blakely. 2017. Taxes and subsidies for improving diet and
population health in Australia: A cost-effectiveness modelling study. PLoS Medicine 14(2):e1002232. doi:10.1371/journal.pmed.1002232.
Question: Will a tax on SSBs alone improve population health and improve dietary choices, or will it take a combination of taxes and subsidies for more healthful options (such as fruits and vegetables)?
Methods: Empirical investigation of a predictive cost-effectiveness model for the economic impact of SSB taxes.
Major Finding(s)/Argument(s): o Sugar taxes produce the biggest health gains (prevent loss of 270,000 DALYs). o Fruit and vegetable subsidies (the broccoli state at work) are cost-effective but show
no health benefit employed in isolation. o The most effective impact on population health may require a combination of taxes
on multiple unhealthful food and beverage products as well as strategic subsidies on healthful foods such as fruits and vegetables.
Key Facts: o Many countries have implemented a tax on SSBs, but pairing it with a corresponding
subsidy on healthful foods has not been well researched or understood. o Dietary factors contribute to almost 10% of the global disease burden. o Australia implemented a 10% tax on unhealthful foods and a 20% tax on SSBs (and
Wright and colleagues showed that increasing the price of an item by at least 20% was required to change behavior).
Key Quotes: o “The sugar-sweetened beverage tax [accounted for the aversion of] 12,000 DALYs.
The fruit and vegetable subsidy [accounted for an increase in] 13,000 DALYs and was a cost-effective addition to the package of taxes.”
o Despite its benefits, the SSB tax was, however, less effective than salt and fat taxes.
Policy Implications: o Modeling simulations on multiple policy options (taxes on saturated fat, salt, sugar,
and SSBs, as well as a subsidy on fruits and vegetables) indicate that a combination approach could avert up to 470,000 DALYs, with a sugar tax credited for 270,000 of those.
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Commentary/Opinion Article #1 Pomeranz, J. L. 2014. Sugary beverage tax policy: Lessons learned from tobacco. American Journal of
Public Health 104(3):e13–15. doi:10.2105/AJPH.2013.301800.
Question: What may be expected from industry and a public health perspective if a sugary beverage tax is implemented?
Methods: Comparative policy analysis.
Major Finding(s)/Argument(s): o On the basis of the example of the tobacco industry and early strategies by the beverage
industry, industry will put resources into lobbying intended to challenge and counter the SSB tax.
o Additional measures such as smoking bans and limits on marketing have combined with the taxes on tobacco to change social norms, leading to the decline in smoking.
Key Facts: Tobacco o Both federal and state governments have the authority to impose taxes. o All 50 states plus the District of Columbia tax cigarettes at $0.17 to $4.35 per pack: the
higher the tax, the greater the impact. o Small tax increases and coupons/discounting still allow cigarette prices to remain low. o Tobacco taxes are credited with reducing both the number of young people who start
smoking and overall cigarette consumption. o Discounting and coupons bring the overall cost of the item down to pretax levels,
making the excise tax ineffective.
Key Quotes: o “Sugary beverage manufacturers additionally offer price discounts, coupons, and other
promotions at the retail level; one study found that one fifth to one third of all incremental sales of sugary beverages are attributable to price discounting alone.”
Policy Implications: o Taxes on SSBs should result in the same public health success as the similar approach to
tobacco. o The excise tax on sugary beverages will not only lead to improved health outcomes but
also generate revenue that could support other public health strategies. o From a feasibility standpoint, conditional licensing (merchants would be licensed to sell
sugary beverages on the condition of compliance with regulations such as minimum pricing laws) has not been used in the context of sugary beverages, so more research will be needed to validate that strategy.
o To reduce consumption and increase revenue, policymakers must consider both enacting and enforcing minimum price laws as well as discontinue couponing that offsets the effect of the tax.
o Other policy options suggested for alignment with a sugary beverage tax include removal from schools, mandated serving size restrictions, educational campaigns, and age limits to purchase harmful unhealthful products (e.g., energy drinks).
o Any tax implementation must raise the price enough to deter purchase.
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Commentary/Opinion Article #2 Scarborough, P., A. Briggs, O. Mytton, and M. Rayner. 2016. The Institute of Fiscal Studies’ verdict on a
sugary drink tax. The Lancet 387(10024):1162. doi:10.1016/S0140-6736(16)00680-2.
Levell, P., M. O’Connell, and K. Smith. 2016. Sugary drinks tax: Response from the Institute for Fiscal Studies. The Lancet 387(10031):1907–1908. doi:10.1016/S0140-6736(16)30421-4.
Question: Is the reported effectiveness of a sugary beverage tax in the UK based on available evidence or speculation?
Methods: Point/counterpoint commentary evaluating the evidence (or lack thereof) used in developing the Institute for Fiscal Studies (IFS) annual Green Report and budget.
Major Finding(s)/Argument(s): o Commentary authors criticize the report for basing conclusions on economic theory and
ignoring evidence from the evaluation of sugary drink taxes in Mexico, Hungary, France, and Berkley, California—all of which have shown reduced purchases of sugary beverages.
o The IFS says that the risk of substitution is not a minimal concern and that consumer switching to other sugary foods or high-calorie beverages would offset the effect of the tax.
o The commentary authors agree that a sugary drink tax alone will reduce sugar consumption to meet a target, but it could play an important part in a comprehensive approach integrating multiple strategies at the population level.
Key Facts: o The report concludes that the efficacy of an SSB tax depends on what products consumers
will switch to purchasing—on the assumption that the tax will steer consumers to other unhealthful options (such as chocolate).
o The commentary authors state that the magnitude of consumer response is an empirical question, and the IFS respondents agreed regarding the need for additional evidence.
Key Quotes: o “Evidence of the effectiveness of the implementation of sugary drink taxes is available, and
it is disappointing that the IFS overlooked this evidence in its Green Budget.” o “While [a sugar tax] may seem an attractive solution to the growing problem of obesity- and
diet-related illness, it should be carefully evaluated to avoid generating unintended consequences.”
Policy Implications: o Together, this commentary and its response from the IFS illustrate the complexity and
intricacy of implementing a sugary beverage tax and potential long-term consequences to the market and to consumers.
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References Backholer, K., Blake, M., & Vandevijvere, S. (2016). Have we reached a tipping point for sugar-
sweetened beverage taxes? Public Health Nutrition, 19(17), 3057-3061 Baker, P., Jones, A., & Thow, A. M. (2017). Accelerating the worldwide adoption of sugar-sweetened
beverage taxes: Strengthening commitment and capacity comment on “The Untapped Power of Soda Taxes: Incentivizing Consumers, Generating Revenue, and Altering Corporate Behavior.” International Journal of Health Policy Management, 7(5), 474-478. Doi: 10.15171/ijhpm.2017.127
Blecher, E. (2015). Taxes on tobacco, alcohol and sugar sweetened beverages: Linkages and lessons
learned. Social Science Medicine, July, 136-137, 175-179. Doi: 10.1016/j.socscimed.2015.05.022 Cobiac, L. J., Tam, K., Veerman, L., & Blakely, T. (2017). Taxes and subsidies for incentivizing diet and
population health in Australia: A cost-effectiveness modelling study. PLoS Medicine, 14(2), e1002232. Doi: 10.1371/journal.pmed.1002232
Colchero, M. A., Molina, M., & Guerrero-López, C. M. (2017). After Mexico implemented a tax,
purchases of sugar-sweetened beverages decreased and water increased: Difference by place of residence, household composition, and income level. Journal of Nutrition, 147(8), 1552-1557. Doi: 10.3945/jn.117.251892
Colchero, M. A., Rivera-Dommarco, J., Popkin, B.M., & Ng, S. W. (2017). In Mexico, evidence of sustained
consumer response two years after implementing a sugar-sweetened beverage tax. Health Affairs, 36(3), 564-571. Doi: 10.1377/hlthaff.2016.1231
Falbe, J., Rojas, N., Grummon, A. H., & Madsen, K. A. (2016). Higher retail prices of sugar-sweetened
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Hawkes, N. (2016). Soft drink makers consider legal challenge against sugar tax. British Medical Journal,
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Pomeranz, J. L. (2014). Sugary beverage tax policy: Lessons learned from tobacco. American Journal of Public Health, 104(3), e13-5. Doi: 10.2105/AJPH.2013.301800
Powell, L. M., Wada, R., Persky, J. J., & Chaloupka, F. J. (2014). Employment impact of sugar-sweetened
beverage taxes. Amerian Journal of Public Health, 104(4), 672-677. Doi: 10.2105/AJPH.2013.301630
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