Does Taxing Soda Decrease Consumption of It? Yes, According to a New Study

August 25, 2016
by Steve Holt for Thrive Market
Does Taxing Soda Decrease Consumption of It? Yes, According to a New Study

Packed with chemicals, added sugars, and artificial flavors, soda is basically the opposite of a health food. Consumption of colas and sugary beverages  has been linked to serious health risks like obesity, type 2 diabetes, and heart disease. With that in mind, most of us can agree—the stuff has zero redeeming qualities.

We’re finally getting smart about it—overall soda consumption has dropped 1.5 percent in the past year. But for some reason we’re still kind of obsessed with it: 1 in 3 Americans drink at least one soda or sugary beverage a day.

Public health officials have tried to curb soda consumption for years. (Remember Mayor Michael Bloomberg’s ill-fated “Soda Ban”?) Now, in an effort to curb consumption of sugary drinks, some cities are taking a technique right out of the anti-smoking playbook: taxation. In theory, when a two-liter soda comes with a stiff tax attached to it, a consumer will think twice about buying it and, perhaps, drink water instead. But does it work?

According to a short-term study of a soda tax implemented last year in Berkeley, Calif—yes. In 2014, Berkeley residents passed the nation’s first citywide tax on sugary beverages—“a penny per ounce.” Many critics said the tax would only serve to stigmatize the poor, rather than reducing soda consumption or increasing water consumption.

Well, University of California, Berkeley researchers studied residents’ drinking patterns before and after the tax took effect in March 2015, finding that not only did sugar-sweetened beverage consumption decrease by 21 percent in the city, overall water consumption went up 63 percent.

Despite the fact that the study was only conducted over a short time and the two samples (before and after) probably overlapped a bit, the researchers hailed the results as evidence that the tax “reduced consumption in vulnerable neighborhoods in Berkeley.” Outside health advocates praised the results as well.

“This study provides another key piece of evidence that sugary drink taxes work, not just to raise revenue for important community priorities, but also to reduce consumption and shift sales from an unhealthy product to healthier drinks, such as bottled water,” said Jim Krieger, executive director of Healthy Food America, a Seattle-based nonprofit supporting sugar reduction efforts across the U.S., at POLITICO.

The major soda companies know these taxes make it more difficult for people to buy their products. To protect their profits, these companies poured millions into efforts to block Berkeley’s ballot question, as well as a similar law in Philadelphia, which passed earlier this year. Of the $13 million spent in the campaign over whether Philadelphia residents would pay a 1.5 cent–per–ounce tax on sugar-sweetened and diet beverages, $11 million came from the American Beverage Association—the leading industry trade group for the major soda companies.

While the findings are considered preliminary, it’s a promising step in the right direction for improving the health of Americans.

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