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An article published in the New England Journal of Medicine suggests that a 1 cent-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. Supported in part by grants from the National Institutes of Health, the Rudd Foundation and the Robert Wood Johnson Foundation, researchers drafted a proposal calling for a "penny per ounce" excise tax on beverages that contain any added caloric sweeteners such as sucrose, high-fructose corn syrup or fruit-juice concentrates. Meanwhile, the group alternatively proposed taxing beverages based on the grams of added caloric sweetener or added kilocalories per ounce or taxing only those beverages that exceed a pre-determined threshold of grams of added caloric sweeteners or kilocalories per ounce. The tax would be levied on producers and wholesalers, rather than on retailers, a decision that is expected to simplify the collection and enforcement process. The tax would increase by between 15 percent and 20 percent the price of a 20-ounce soft drink, generating an estimated $14.9 billion in tax revenue in the first year following the tax and approximately $150 billion within 10 years. The researchers propose that states use the money generated by the tax to support child nutrition and obesity-prevention programs, extend health care for the uninsured, or to help meet other general revenue needs. Currently, 33 states have sales taxes on soft drinks, but in most cases, the taxes, which average approximately 5.2 percent, are too small to affect consumption rates and the revenues are not earmarked for programs related to health. The researchers predict that the higher taxes will result in a reduction in consumption, with one price elasticity algorithm predicting that consumption could decrease 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," adding that it fails to address the "epidemic of inactivity" in the United States. Responding to such criticism, 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]).