The word “tax” makes everyone a little bit nervous, especially this time of year. Last month, however, news broke that in the first year of Mexico’s soda tax (a tax on sugar-sweetened sodas), sales of these beverages dropped significantly.(1) In the second year of the tax, the sales dropped even more.
In the U.S., both Philadelphia and Berkeley, California have already passed levies on the sugary drinks. And in November, they got company. Voters in San Francisco, Oakland, and Albany California voted in a soda tax, as did Boulder, Colorado, and Chicago, Illinois. Tax money collected has been used to fund various projects in these cities, including saving public safety jobs and funding early childhood education.
Advocates of soda taxes say their approach was inspired by taxes on tobacco, which, at least in part, have led to decreased consumption of cigarettes. You might even hear the phrase “Big Soda,” a nod to the “Big Tobacco” of many years ago.
So do taxes on sugar-sweetened beverages discourage people from purchasing them? Let’s look at the evidence. In Mexico, purchased of these beverages dropped an average of almost 8% over the two years, with the biggest decreases seen in low-income households. A 2017 review on the effect on food pricing showed that for each 10% increase in the price of sugary beverages, there was a 7% decrease in consumption. (2) However, the drop in consumption did not result in changes in body mass index (BMI). In other words, increasing the price did not lead to weight loss. (From the same review, interestingly, it was found that decreasing the prices of fruits and vegetables reduces BMI.)
Soda consumption is down in the U.S. already. In 2002, only 41% of those surveyed avoided soda. In 2014, that number jumped to 63%. (3) More people are choosing bottled water and other beverages they may consider to be a healthier choice. Whether this decrease in consumption of the sweet stuff will affect public health, remains to be seen, however.
If you drink soda, would a tax cause you to think twice?
(1) Cochero M, Rivera-Dommarco J, Popkin B, Ng S. In Mexico, evidence of sustained consumer response Two years after implementing A sugar-sweetened beverage tax. Health affairs (Project Hope). February 2017.
(2) .Afshin A, Peñalvo J, Gobbo D, et al. The prospective impact of food pricing on improving dietary consumption: A systematic review and meta-analysis. PloS one. 2017;12(3).
(3) Gallup I. Majority of Americans say they try to avoid drinking soda. http://www.gallup.com/poll/184436/majority-americans-say-try-avoid-drinking-soda.aspx. Accessed March 6, 2017.