Are soda taxes worth it?



America is overweight.  With people moving less and consuming more junk food and highly-sweetened beverages, a population with 26% overweight prevalance is not surprising.  As it is not easy to drive people to visit gyms or ride their bikes more often, making them consume less sugary beverages may be a measure against obesity and, at the same time, increase much needed revenues.

 A new study from the Duke National University of Singapore Graduate Medical School, however, found that imposing 20 or 40% taxes on sweetened beverages  „would lead to only minimal weight loss among most people and would have no effect on weight among consumers in the highest and lowest income groups“.   

 The researchers used American database on beverage purchases from stores and household consumption and employed statistical techniques to come up how changes in prices affect buying habits.  They also calculated weight losses due to reduction of beverage consumption as a result of tax increase and weight gains due to brand switches.

 Their computations show that a 20% sales tax would generate $1.5 billion a year and a 40% tax, $25 billion a year, which, as another economist commented,  may be regressive as people from lower income groups pay a higher proportion of these taxes.  However, since generic beverages are much cheaper, low-income groups buy more of these brands.  The researchers stated that these groups would actually account only for „20 percent of total tax revenue whereas those in each of the two middle income and high income groups would contribute 25 and 30 percent of the total, respectively.“  This switching to cheaper sweetened beverages would generate a calorie reduction of 6.9 per day, which is just equivalent to 0.7 pounds a year per household member while a 40% tax would reduce calories of 12.5 a day amounting to 1.3 pounds a year.  These figures are not really significant.  However, according to Finkelstein, the study’s lead researcher, any strategy that fights  obesity should be considered however modest.  It should also be noted that the data considered were all based on purchases from stores.  Purchases from restaurants and vending machines were not included.  Who knows?  If sodas get unaffordable from school vending machines, kids would start drinking water and fruit juices, like it used to be.  Like it’s suppose to be.

 Note: This post was written by Joyce, a colleague covering for me during my stay in NZ. Thanks, Joyce!

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