Researchers develop revenue calculator for soda taxes

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Sugar-sweetened beverages Tax Alcoholic beverage

A penny-per-ounce tax on sugary drinks could generate $79bn over a five-year period, according to a revenue calculator developed by researchers at Yale’s Rudd Center for Food Policy and Obesity.

The idea of taxing soda and other sugar-sweetened beverages has been suggested repeatedly on a state and national level as a way to fund anti-obesity campaigns, to dissuade consumption of sugary drinks, and to raise revenue to help plug budget deficits.

The calculator – which can be accessed online here​ – has been developed based on regional beverage consumption data, historic trends, and estimates of the price elasticity of sugar-sweetened beverage demand. It estimates potential revenues on a federal, state, and city level, by tax per ounce and type of beverage.

The researchers who developed the calculator have authored a paper​, published in the latest issue of Preventive Medicine, ​which describes the methods they used in its development. They estimate that a nationwide penny-per-ounce tax on sugar-sweetened beverages could reduce consumption by 24 percent and reduce daily caloric intake from sugar-sweetened beverages from 190-200 calories to 145-150 calories, as well as generate revenue of $79bn over five years.

However, an accompanying editorial by Ryan D. Edwards, an assistant economics professor at the City University of New York, questions the motivation behind taxing sugar-sweetened beverages (SSB). Edwards claims that without information on what consumers might substitute for sugary drinks, it is difficult to work out whether levying such a tax would have positive public health outcomes.

He wrote that taxing such drinks “will certainly reduce SSB consumption​”, but could also increase consumption of substitutes like diet soft drinks, and also juices, milk, water, and maybe alcoholic beverages.

“The available evidence is sufficient to raise healthy skepticism, and that should drive us toward further study and exploring policy alternatives,”​ he wrote.

The beverage industry has consistently opposed the idea of taxes to discourage consumption of some soft drinks, saying that they would do little to combat obesity or other health problems, and unfairly target one product as largely responsible for obesity.

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