Image by azerbaijan_stockers on Freepik

In the ongoing battle against obesity, sugar-sweetened beverages have become a prime target. The logic seems straightforward: tax sodas, raise their prices, and discourage consumption. This approach has led to a wave of soda taxes across the globe, from California’s Bay Area to the UK’s Soft Drinks Industry Levy. However, despite these efforts, the impact on reducing sugar intake and combating obesity has been minimal. This article delves into why soda taxes have fallen short and explores alternative strategies that might be more effective.

The Promise and Reality of Soda Taxes

The idea behind soda taxes is simple. By making sugary drinks more expensive, consumers are expected to buy less of them, thereby reducing their sugar intake and, ultimately, their risk of obesity and related health issues. For instance, cities in California’s Bay Area have imposed a tax of 1 cent per ounce on sugary beverages. Given that soda costs about 5 cents per ounce in the western US, this represents a significant price increase.

Yet, even the most effective soda taxes, such as the UK’s Soft Drinks Industry Levy, have only led to a modest decrease in sugar consumption. On average, these taxes have reduced the intake of added sugars by just 18 calories per day — roughly equivalent to a single teaspoon of sugar. This reduction can be easily offset by consuming just two gummy bears, a teaspoon of ice cream, or two potato chips.

Why Soda Taxes Are Ineffective

Several factors contribute to the limited success of soda taxes. First, it is often assumed that the entire tax will be passed on to consumers. However, companies frequently absorb part of the tax to avoid significant drops in sales. Research conducted with doctoral dissertation student Hairu Lang found that, on average, only about half of local soda taxes in the US are added to product prices. Consequently, the change in consumer purchases is less than expected, and sales revenue often increases despite the tax.

Moreover, soda taxes are typically implemented in only a few cities, leading to cross-border shopping. Consumers simply buy their sodas in nearby areas without the tax. For example, a 2020 study found a 46 percent reduction in sales of taxed beverages in Philadelphia following a 1.5-cents-per-ounce tax. However, more than half of this reduction was offset by cross-border shopping. More recent data shows even lower average sales reductions in Philadelphia stores, further diminished by cross-border shopping.

The Impact on Low-Income Communities

Some advocates argue that soda taxes can help address health inequities, as low-income and racially diverse communities tend to consume more sugary beverages and suffer disproportionately from obesity and related health issues. In theory, soda taxes could nudge these households toward healthier choices. However, the evidence suggests otherwise.

Research indicates that a higher share of the tax is passed on to consumers in low-income neighborhoods, and these households are less responsive to price hikes than those in wealthier areas. As a result, low-income households bear a heavier burden of soda taxes without experiencing the promised health benefits. Advocates sometimes counter that the revenue from soda taxes can be redirected into programs that benefit these same households. However, such programs could be more directly and equitably funded through income taxes.

▋Alternative Strategies for Reducing Sugar Consumption

Given the limitations of soda taxes, what other strategies might be more effective in reducing sugar consumption and combating obesity? Here are a few suggestions:

• Nationwide Soda Taxes: Implementing soda taxes at a national level, rather than locally, could minimize cross-border shopping and ensure a more uniform impact on consumption.

• Taxing Sugar Content: Instead of taxing beverage volume, a tax on sugar content (with lower rates for less sugary products) could incentivize manufacturers to reduce the sugar added to their drinks. In the UK, about 80 percent of the overall reduction in added sugar purchased comes from manufacturer reformulations rather than decreased purchases.

• Broader Sugar Taxes: Policies targeting only sodas are unlikely to significantly reduce overall sugar consumption. Broader taxes on added sugars in all kinds of foods and drinks, coupled with subsidies for healthier alternatives like fresh fruits and vegetables, stand a better chance of success.

• Education Campaigns and Labeling Policies: Informing consumers about the dangers of excessive sugar consumption can empower them to make healthier choices. Countries like Chile, Peru, and Uruguay have implemented clear warning labels on high-sugar products, which could be a model for other nations.

Conclusion

While soda taxes have been widely endorsed by public health advocates and policymakers, the evidence suggests they are not sufficient to reverse obesity trends. To effectively reduce sugar consumption and combat obesity, a multifaceted approach is needed. This includes nationwide taxes, incentives for manufacturers to reduce sugar content, broader sugar taxes, and robust education campaigns. Only by combining these strategies can we hope to make a meaningful impact on public health.