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Sugar sweetened beverage taxes

Evidence Rating

Some Evidence

Health Factors

Decision Makers

States and municipalities can add an excise tax or a sales tax to the current price of soda, fruit drinks, energy drinks, tea or coffee drinks, sports drinks, or other sugar sweetened beverages to increase the price of those beverages. An excise tax charges a fee per ounce; for example, a 1 cent excise tax on a 20-ounce soda bottle is 20 cents. A sales tax charges a percentage of the product’s price; when a 20-ounce soda bottle costs $2.00, a 4% sales tax is 8 cents. Funds generated by the tax may be used to subsidize healthy foods or to support other public health ventures.

Expected Beneficial Outcomes (Rated)

  • Reduced sweetened beverage consumption

Other Potential Beneficial Outcomes

  • Improved weight status

  • Reduced obesity rates

Evidence of Effectiveness

There is some evidence that sugar sweetened beverage (SSB) taxes decrease consumption of soda and other sweetened beverages, although current tax levels are generally too low to significantly affect consumer behavior (, AHA-Mozaffarian 2012). SSB taxes increase the price of beverages for consumers (, ); taxes that change the relative prices of healthy and unhealthy foods have been shown to affect both consumption patterns and obesity levels (Eyles 2012Urban-Engelhard 2009). However, additional evidence is needed to confirm effects.

Current soda sales tax levels, typically no more than 4% of purchase price, may not substantially reduce consumption overall (Sturm 2010), but may benefit at-risk children (Sturm 2010) and have a small effect on adults’ weight (Fletcher 2010a). Existing soda taxes do not appear to be associated with adolescent body mass index (BMI) (). 

Higher magnitude effects could occur if taxes were higher than current levels (USDA-Smith 2010Kuchler 2005a). Following Berkeley’s 2015 implementation of an additional city-level one cent per ounce soda tax (approximately 12 cents per can), SSB consumption decreased 21% and water consumption increased by 63%; in neighboring cities, SSB consumption increased 4% and water consumption increased by 19% (). A similar excise tax, implemented in Mexico in 2014, also decreased SSB purchases and increased purchases of non-taxed, healthier alternatives; these effects were largest among low income households (). Estimates suggest that raising the cost of SSBs by 20% would decrease calorie consumption and result in weight loss (USDA-Smith 2010).

Reductions in child and adolescent soda consumption may be offset by increases in consumption of other high calorie drinks if taxes are too narrow in scope (). Taxes in small geographic areas may also have minimal effects on consumption, since consumers can easily purchase SSBs in neighboring areas without such taxes (). A study of Mexico’s tax suggests that soda taxes increase the price consumers pay by the amount of the tax (NBER-Grogger 2015); however, in Berkeley, the consumer price increased by less than half the amount of the tax, perhaps due to store owner concerns about consumers shopping in other cities ().

Models estimate a 0.5 cent per ounce soda tax generates $5.8 billion annually in tax revenue (), which could support nutrition initiatives through subsidies for fruits and vegetables () or funding for obesity prevention (Kuchler 2005a). A national cost-effectiveness study suggests that a one cent per ounce SSB tax would save $23.6 billion in health care costs over a 10-year period, increase healthy life expectancy, and generate $12.5 billion in annual revenue (Long 2015a); city-level models suggest that a one cent per ounce municipal SSB tax is also cost-effective (CHOICES).

Price changes are likely to have a greater effect on the purchasing decisions of low income families than higher income families, as seen in Berkeley and Mexico (Rudd-Friedman 2012, , ), and youth than adults (AHA-Mozaffarian 2012). Greater reductions in SSB consumption may lead to more health benefits and larger reductions in obesity rates among low income families (Rudd-Friedman 2012). States can provide tax credits or rebates to low income households to encourage substitutions of healthy beverages for SSBs, which would minimize the regressive income effect of SSB taxes (, ).

A model-based study on net employment in Illinois and California suggests declines in beverage industry employment due to SSB taxes are likely offset by new employment opportunities ().

Impact on Disparities

Likely to decrease disparities

Implementation Examples

As of 2014, 34 states and Washington DC have sales taxes on soda sold in food stores. In 20 states, sales taxes on soda are higher than the general state sales tax for food products. In 30 states, sales tax on soda sold through vending machines is higher than the general state sales tax for food products (BTG-Soda or snack).

In March 2015, Berkeley, California implemented a penny per ounce tax on sugar sweetened beverages, the first city-level tax in the nation (Berkeley-SSB tax). As of 2017, six additional cities passed SSB taxes: Philadelphia, Pennsylvania passed a 1.5 cent per ounce tax (Philadelphia-Beverage tax); Boulder, Colorado passed a two cent per ounce tax; and one cent per ounce taxes were passed in Cook County, Illinois (Cook County-SSB tax) and 3 Bay Area cities (San Francisco, Oakland, and Albany) (UCONN Law-Cox 2016). 

Implementation Resources

ChangeLab-SSB regulation - ChangeLab Solutions. Sugar-sweetened beverage regulation.

Rudd-Resources - UCONN Rudd Center for Food Policy & Obesity. Resources & tools: Publications, reports, databases, and a revenue calculator for sugar-sweetened beverage taxes.

AHA-VFHK toolkits - American Heart Association (AHA), Robert Wood Johnson Foundation (RWJF). Voices for healthy kids (VFHK): Toolkits to make the healthy choice the easy choice in the places where children live, learn and play.

CDC-DNPAO data - Centers for Disease Control and Prevention (CDC), Division of Nutrition Physical Activity and Obesity (DNPAO). Nutrition, physical activity and obesity: Data, trends and maps online tool.

CHOICES - Childhood Obesity Intervention Cost Effectiveness Study (CHOICES). Community and government programs and policies: Publications, briefs, and reports.

Citations - Evidence

* Journal subscription may be required for access.

French 2001* - French SA, Story M, Jeffrey RW. Environmental influences on eating and physical activity. Annual Review of Public Health. 2001;22:309–35.

Fletcher 2010a - Fletcher JM, Frisvold D, Tefft N. Can soft drink taxes reduce population weight? Contemporary Economic Policy. 2010;28(1):23-35.

Fletcher 2010b* - Fletcher JM, Frisvold DE, Tefft N. The effects of soft drink taxes on child and adolescent consumption and weight outcomes. Journal of Public Economics. 2010;94(11-12):967-74.

Kuchler 2005a - Kuchler F, Golan E, Variyan JN, Crutchfield SR. Obesity policy and the law of unintended consequences. Amber Waves. 2005;3(3).

Powell 2009* - Powell LM, Chaloupka FJ. Food prices and obesity: Evidence and policy implications for taxes and subsidies. Millbank Quarterly. 2009;87(1):229-57.

USDA-Smith 2010 - Smith TA, Lin BH, Lee JY. Taxing caloric sweetened beverages: Potential effects on beverage consumption, calorie intake, and obesity. Washington, DC: Economic Research Service (ERS), US Department of Agriculture (USDA); 2010: ERR-100.

Sturm 2010 - Sturm R, Powell LM, Chriqui JF, Chaloupka FJ. Soda taxes, soft drink consumption, and children’s body mass index. Health Affairs. 2010;29(5):1052-8.

Todd 2010* - Todd J, Zhen C. Can taxes on calorically sweetened beverages reduce obesity? Choices: The Magazine of Food, Farm and Resource Issues. 2010;25(3).

Urban-Engelhard 2009 - Engelhard C, Garson A, Dorn S. Reducing obesity: Policy strategies from the tobacco wars. Washington, DC: Urban Institute; 2009.

Rudd-Friedman 2012 - Friedman R, Brownell K. Sugar-sweetened beverage taxes: An updated policy brief. New Haven: Yale Rudd Center for Food Policy & Obesity; 2012.

Eyles 2012 - Eyles H, Ni Mhurchu C, Nghiem N, Blakely T. Food pricing strategies, population diets, and non-communicable disease: A systematic review of simulation studies. PLoS Medicine. 2012;9(12):e1001353.

Powell 2013* - Powell LM, Chriqui JF, Khan T, Wada R, Chaloupka FJ. Assessing the potential effectiveness of food and beverage taxes and subsidies for improving public health: A systematic review of prices, demand and body weight outcomes. Obesity Reviews. 2013;14(2):110–28.

Finkelstein 2013* - Finkelstein EA, Zhen C, Bilger M, et al. Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered. Journal of Health Economics. 2013;32(1):219–39.

Lin 2011* - Lin BH, Smith TA, Lee JY, Hall KD. Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax. Economics and Human Biology. 2011;9(4):329–41.

Dharmasena 2012* - Dharmasena S, Capps O Jr. Intended and unintended consequences of a proposed national tax on sugar-sweetened beverages to combat the US obesity program. Health Economics. 2012;21(6):669–94.

Novak 2011* - Novak NL, Brownell KD. Taxation as prevention and as a treatment for obesity: The case of sugar-sweetened beverages. Current Pharmaceutical Design. 2011;17(12):1218–22.

AHA-Mozaffarian 2012 - Mozaffarian D, Afshin A, Benowitz NL, et al. Population approaches to improve diet, physical activity, and smoking habits: a scientific statement from the American Heart Association (AHA). Circulation. 2012;126(12):1514–63.

Powell 2014* - Powell LM, Wada R, Persky JJ, Chaloupka FJ. Employment impact of sugar-sweetened beverage taxes. American Journal of Public Health. 2014;104(4):672-677.

NBER-Grogger 2015 - Grogger J. Soda taxes and the prices of sodas and other drinks: Evidence from Mexico. National Bureau of Economic Research (NBER). 2015: Working paper 21197.

Niebylski 2015* - Niebylski ML, Redburn KA, Duhaney T, Campbell NR. Healthy food subsidies and unhealthy food taxation: A systematic review of the evidence. Nutrition. 2015;31:787-795.

Cawley 2015* - Cawley J. An economy of scales: A selective review of obesity's economic causes, consequences, and solutions. Journal of Health Economics. 2015;43:244-268.

Backholer 2016* - Backholer K, Sarink D, Beauchamp A, et al. The impact of a tax on sugar-sweetened beverages according to socio-economic position: A systematic review of the evidence. Public Health Nutrition. 2016;19(17):3070-3084.

Falbe 2016* - Falbe J, Thompson HR, Becker CM, et al. Impact of the Berkeley excise tax on sugar-sweetened beverage consumption. American Journal of Public Health. 2016;106(10):1865-1871.

Cawley 2016* - Cawley J, Frisvold DE. The pass-through of taxes on sugar-sweetened beverages to retail prices: The case of Berkeley, California. Journal of Policy Analysis and Management. 2016.

Long 2015a - Long MW, Gortmaker SL, Ward ZJ, et al. Cost effectiveness of a sugar-sweetened beverage excise tax in the U.S. American Journal of Preventive Medicine. 2015;49(1):112-123.

CHOICES - Childhood Obesity Intervention Cost Effectiveness Study (CHOICES). Community and government programs and policies: Publications, briefs, and reports.

Cochero 2017* - Cochero MA, Rivera-Dommarco J, Popkin BM, Ng SW. In Mexico, evidence of sustained consumer response two years after implementing a sugar-sweetened beverage tax. Health Affairs. 2017;36(2):1-8.

Citations - Implementation Examples

* Journal subscription may be required for access.

BTG-Soda or snack - Bridging the Gap (BTG). Soda/snack taxes.

Berkeley-SSB tax - City of Berkeley California. Berkeley Municipal Code Chapter 7.72: Sugar-sweetened beverage product distribution tax.

Philadelphia-Beverage tax - City of Philadelphia, Pennsylvania. Philadelphia beverage tax.

Cook County-SSB tax - Cook County, Illinois. Cook County sweetened beverage tax.

UCONN Law-Cox 2016 - Cox S. Sugary drinks taxation. UCONN School of Law, Law Library Blog. 2016.

Cawley 2016* - Cawley J, Frisvold DE. The pass-through of taxes on sugar-sweetened beverages to retail prices: The case of Berkeley, California. Journal of Policy Analysis and Management. 2016.

Date Last Updated

Feb 23, 2017