Time to Consider a Tax on Sugary Beverages?

April 15, 2009

By Mark Bishop, Deputy Director

Sugar, rum, and tobacco are
commodities which are nowhere necessaries of life, which are become
objects of almost universal consumption, and which are therefore
extremely proper subjects of taxation.

— Adam Smith, The Wealth of Nations, 1776


HSC hasn't played a significant role in supporting any kind of snack tax, but in a time when tax revenue is scarce, many states are considering a tax on beverages with sugar or high-fructose corn syrup.

In the New England Journal of Medicine, Yale professor Kelly D. Brownell argues that the time is right for a tax on sugared beverages:

Taxes on tobacco products have been highly effective in reducing consumption, and data indicate that higher prices also reduce soda consumption. A review conducted by Yale University's Rudd Center for Food Policy and Obesity suggested that for every 10% increase in price, consumption decreases by 7.8%. An industry trade publication reported even larger reductions: as prices of carbonated soft drinks increased by 6.8%, sales dropped by 7.8%, and as Coca-Cola prices increased by 12%, sales dropped by 14.6%.

Such studies — and the economic principles that support their findings — suggest that a tax on sugared beverages would encourage consumers to switch to more healthful beverages, which would lead to reduced caloric intake and less weight gain.

As the argument goes, data shows that taxes on soda would reduce
consumption and raise money for important public health programs. And
while such a tax is regressive, it's also true that low income,
minority populations face obesity rates significantly higher than the population as a whole.

With kids now taking in up to 15 percent of their total daily calories from drinks that contain sugar, it may be time to revisit this issue.