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Report Suggests Soda Tax Could Curb Obesity, Generate Revenue for States
An article published in the New England Journal of Medicine suggests that a penny per-ounce tax on soda and other sugar-sweetened beverages could help curb obesity and its related health problems, as well as generate revenue to cover increasing health care costs, Bloomberg reports. Such a tax would be levied on producers and wholesalers, rather than on retailers, a decision the authors say would simplify collection and enforcement. The tax would increase the price of a 20-ounce soft drink by between 15 percent and 20 percent, generating an estimated $14.9 billion in tax revenue in its first year, and approximately $150 billion within 10 years. The authors propose that states use the money to support child nutrition and obesity-prevention programs, extend health care for the uninsured, or help meet other general revenue needs. Currently, 33 states have sales taxes on soft drinks at an average rate of 5.2 percent, but in most cases they are too small to affect consumption rates and the revenues are not earmarked for health-related programs. The researchers predict that higher taxes would result in reduced consumption, with one estimate predicting that a 10 percent increase in price could reduce consumption by between 8 percent and 10 percent. The proposal has drawn criticism from several food industry representatives. For example, a Center for Consumer Freedom analyst notes that “taxes on soda are a distraction,” that fails to address the “epidemic of inactivity” in the United States. The researchers note that “the science base linking the consumption of sugar-sweetened beverages to the risk of chronic diseases is clear,” and that “taxes on beverages that help drive the obesity epidemic should and will become routine” (Lopatto, Bloomberg, 9/16/09; Fiore, MedPage Today, 9/16/09; Brownell et al., New England Journal of Medicine, 9/16/09 [subscription required]). (Editor’s note: Kelly Brownell, Joe Thompson and Frank Chaloupka lead RWJF-funded initiatives.)