Proposed tax on sugar-sweetened beverages could generate revenue, reduce obesity rates

A group of medical researchers are proposing a 1-cent per ounce tax on beverages that contain any added caloric sweetener as an attempt to alleviate escalating health care costs and the rising number of diseases related to poor diet.

In a health policy report published in The New England Journal of Medicine, researchers at Yale, Harvard School of Public Health and other U.S. institutions explained that the link between sugar-sweetened beverages and obesity, as well as type 2 diabetes and cardiovascular disease, has been demonstrated in several studies, including the Nurses’ Health Study.

The researchers claim the 1-cent per ounce tax would increase the cost of a 20-oz soft drink by 15% to 20%. Price elasticity suggests a decrease in consum-ption of 8% to 10%, with an even greater decrease in consumption expected after consumers begin switching to diet beverages. The researchers estimated that consumers would substitute calories in other forms for 25% of the reduced calorie consumption, leading to a minimum reduction of 10% in calorie consumption or 20 kcal per day from sweetened beverages, which they said is sufficient for weight loss and risk reduction.

The 1-cent per ounce tax would generate $14.9 billion in the first year, according to the researchers. The money generated could be used to support childhood nutrition programs, obesity prevention programs, health care for the uninsured or to help meet general revenue needs. At the state level, the researchers wrote that revenue would range from $139 million in Arkansas to $1.8 billion in California.

An alternative to the 1-cent per ounce tax would be to tax beverages that exceed a threshold of grams of added caloric sweetener. The researchers suggested this threshold be set at 1 g of sugar per ounce. The specific excise tax — a tax levied on units such as volume or weight — could be levied on the producers and wholesalers, according to the researchers. The cost would then be passed along to retailers, which would incorporate it into the retail price, therefore making consumers aware of the cost at the time of purchase.

Although the researchers emphasized the need for an excise tax, rather than a sales tax, they did suggest states that currently exempt sugar-sweetened beverages from sales taxes eliminate this practice.

However, consumer groups have expressed disagreement with such a tax.

“Taxes on soda are a distraction that won’t address the real problem facing overweight Americans — an epidemic of inactivity,” J. Justin Wilson, senior research analyst at the Center for Consumer Freedom, said in a press release. “The American people overwhelmingly oppose it and science shows that it will have little to no impact on our weight.”

Last month, the Center for Consumer Freedom called on President Barack Obama to abandon ideas of a new tax on soft drinks after he was quoted saying he is open to “sin taxes” on soda in hopes of curbing obesity. The nonprofit group cited data that indicate these taxes do nothing to address the problem of obesity, and instead show that physical inactivity is the single largest contributor to obesity among children.

Further, results of a recent Opinion Research Corporation poll of 1,006 Americans reveal that 65% of those polled disagree that soft drinks should carry extra taxes to discourage their consumption. – Cardiologytoday