Mariah Baker, National Center for Health Research
Sugar-sweetened beverages are the largest source of added sugar in the standard American diet, averaging 150 calories every day per person. They include soda, sports drinks, energy drinks, and prepackaged coffee and tea beverages. There are many different types of added sugar in these drinks, including sucrose (table sugar), honey, and high fructose corn syrup. Regardless of the source of sugar, the average of 150 calories per person equal the total added sugar recommended for men, and more than the 100 calories recommended for women. Many “single-serving” drinks sold in drug stores and gas stations contain double that amount.
These drinks are popular, and they are often inexpensive. For that reason, sugar-sweetened beverage taxes have been introduced in some communities to reduce sales and decrease obesity, diabetes, and heart disease.1
What Are Sugar-Sweetened Beverage Taxes?
Sugar-sweetened beverage taxes are an additional tax on sugar-sweetened beverages, usually with the exception of 100% fruit juices, milk or milk-alternative products, baby formula, alcohol, and diet drinks. In addition to aiming to reduce the use of these drinks by making them less affordable, the revenue from the taxes goes back into the community. These taxes are one of the only public health policies that generate more revenue than they cost to implement, and the funding is usually used to finance public health or education programs. A similar strategy to tobacco taxes, they are designed to increase the prices of these drinks enough to reduce consumption. They are considered excise taxes, which are different from standard sales taxes in that the tax is paid by the retailer instead of the customer. Most sugar-sweetened beverage taxes in the U.S. are one to two cents per ounce of beverage.2
Do These Taxes Work?
The World Health Organization recommends these taxes as an effective way to reduce overall sugar consumption and decrease diseases such as diabetes and heart disease. These taxes have been implemented in several countries, including Norway, Mexico, and England. As of 2021, no state in the US has a sugar-sweetened beverage tax, but seven cities do, including Berkeley, CA, Albany, CA, Oakland, CA, San Francisco, CA, Philadelphia, PA, Seattle, WA, and Boulder, CO.
Berkeley, California, was the first in the U.S, passing a 1 cent per ounce tax in 2015. This resulted in an average price increase for customers of 0.47 cents per ounce.3 It will take a few years to determine any long-term health effects, but one year after the tax was implemented, consumption dropped by 21%. Three years after the tax was implemented, consumption had dropped by about 50%, and and the amount of bottled and tap water that residents reported drinking had increased by almost 30%.4 The tax brings in approximately $1.5 million every year, most of which is used to fund nutrition education programs such as the Berkeley Unified School District’s Cooking and Gardening Program, which plants gardens on school campuses and teaches children about how food is grown.
In 2017, Philadelphia established a 1.5 cents per ounce tax on beverages that were sweetened with sugar or artificial sweeteners.2 The tax resulted in a price increase between 0.65 cents per ounce and 1.56 cents per ounce, depending on the store.5 One year after implementing this tax, researchers found that the purchase of these drinks decreased by 51% in larger stores, and a separate study showed a decrease of almost 40% in small, independent stores.2,5 However, their data also found an increase in the purchase of these drinks in cities bordering Philadelphia, indicating that consumers may have been going outside of the city to purchase beverages that weren’t taxed. After taking the increased purchases in bordering cities into account, the tax resulted in a 38% decrease in the purchase of sugary beverages.
While it would be early to determine the impact on obesity or chronic diseases, several studies have projected the possible long-term impact. A 2010 study estimated that these taxes lead to a moderate decrease in soft drink consumption, especially in children and teens.6 The researchers projected that children and teens may replace these drinks with other high-calorie beverages, such as milk or smoothies. While milk and smoothies are high in calories, they provide protein, vitamins, or calcium that are beneficial, whereas sugar-sweetened beverages have no nutritional value. In 2020, the American Heart Association (AHA) published a health impact and cost-effectiveness analysis. They estimated that a national tax on sugar-sweetened beverages would prevent 850,000 cardiovascular disease events, such as heart attack or stroke, and 269,000 cases of diabetes. The AHA also estimated that the tax could result in over $80 billion in tax revenue over a lifetime.7
Why Should Sugar-Sweetened Beverages Be Taxed?
Hover over the images to learn about the sugar content in popular sugar-sweetened beverages.
Unfortunately, drinks sweetened with artificial sweeteners, such as Sucralose, Aspartame, and Saccharin, also have health risks, increasing the chances of obesity, heart disease, and diabetes when consumed almost every day. You can learn more about artificial sweeteners here.
Almost 70% of adults in the U.S. are overweight, and that increases the risk of Type II Diabetes, heart disease, and several different types of cancer. One study showed that just one to two sugar-sweetened beverages per day increases the likelihood of developing diabetes.8 These beverages also affect dental health, especially in young children. One or two per day increases the risk of developing a cavity by over 30%, and babies between the age of 10 and 12 months that were given more than three per week were 83% more likely to develop a cavity by age six compared to those who had none.9,10
One reason why these taxes could be useful is because they are more popular among those with low incomes who would be deterred by an increase in cost. One analysis shows that the richest 10% of Americans drink 2.5 fewer sugary drinks per week than the poorest 10%.11 Since low-income and Black and Mexican Americans have higher rates of diabetes and heart disease, their health could disproportionately benefit from these taxes.3 One study in Philadelphia suggested that young adults, low-income Americans, and Black and Hispanic Americans would benefit most from the tax.
What’s The Argument Against These Taxes?
Those who oppose the tax claim that people will replace sweetened beverages with candy or other sugary snacks. Critics point out a lack of data to determine whether the taxes improve health; they are correct, but there are also no studies indicating that they don’t improve health.
Taxes are never popular, and these taxes are no exception. Even when the taxes become law, they are sometimes repealed. For example, Cook County, IL, which includes Chicago, enacted a tax in 2016, but it was repealed less than a year later. Other states, such as Arizona and Michigan, have preemptively blocked local governments from enacting future taxes. In 2018, California signed a law that prohibits local governments from adopting new sugar-sweetened beverage taxes, although the law did not affect taxes that were already implemented in Berkeley, Albany, Oakland, and San Francisco.14 In 2021, an effort is underway to repeal the law, which our Center supports. You can read our letter here.
The Bottom Line
Sugar-sweetened beverages are consumed at dangerously high levels by many Americans, resulting in obesity, diabetes, heart disease, and cancer. Taxes on these beverages provide an incentive to reduce consumption while helping increase revenue to benefit the community. While this strategy alone will not alleviate the obesity epidemic or substantially decrease the cases of heart disease and diabetes, it is likely to benefit communities when paired with other programs, such as information campaigns to promote healthy eating.
- Centers for Disease Control and Prevention The Get the facts: Sugar-sweetened beverages and consumption. Cdc.gov. https://www.cdc.gov/nutrition/data-statistics/sugar-sweetened-beverages-intake.html#:~:text=Sugar%2Dsweetened%20beverages%20are%20any,%2C%20raw%20sugar%2C%20and%20sucrose. March 11, 2021.
- Bleich, S. N., Lawman, H. G., LeVasseur, M. T., Yan, J., Mitra, N., Lowery, C. M., … & Roberto, C. A. The Association Of A Sweetened Beverage Tax With Changes In Beverage Prices And Purchases At Independent Stores: Study compares changes in sweetened beverage prices and purchases before and twelve months after tax implementation, at small, independent stores in Philadelphia. Health Affairs. 2020; 39(7), 1130-1139. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01058#:~:text=Sugar%2Dsweetened%20beverage%20(SUGAR SWEETENED BEVERAGES),to%20several%20adverse%20health%20conditions.&text=Seven%20cities%20and%20counties%20in,to%202%20cents%20per%20ounce
- Falbe, J., Rojas, N., Grummon, A. H., & Madsen, K. A. Higher retail prices of sugar-sweetened beverages 3 months after implementation of an excise tax in Berkeley, California. American Journal of Public Health. 2015; 105(11), 2194-2201. https://pubmed.ncbi.nlm.nih.gov/26444622/
- Price, A. Do soda taxes work? PublicHealth.Berkeley.edu. https://publichealth.berkeley.edu/news-media/research-highlights/do-soda-taxes-work/ October 29, 2020.
- Roberto, C. A., Lawman, H. G., LeVasseur, M. T., Mitra, N., Peterhans, A., Herring, B., & Bleich, S. N. (2019). Association of a beverage tax On Sugar-sweetened and artificially sweetened beverages with changes in Beverage prices and sales at chain retailers in a large urban setting. JAMA, 321(18), 1799. doi:10.1001/jama.2019.4249
- Fletcher, J. M., Frisvold, D. E., & Tefft, N. The effects of soft drink taxes on child and adolescent consumption and weight outcomes. Journal of Public Economics. 2010; 94(11-12), 967-974. https://www.sciencedirect.com/science/article/pii/S0047272710001222
- Lee, Y., Mozaffarian, D., Sy, S., Liu, J., Wilde, P.E., Marklund, M., Abrahams-Gessel, S., Gaziano, T.A. and Micha, R. Health impact and cost-effectiveness of volume, tiered, and absolute sugar content sugar-sweetened beverage tax policies in the United States: a microsimulation study. Circulation. 2020; 142(6), 523-534. https://www.ahajournals.org/doi/full/10.1161/CIRCULATIONAHA.119.042956
- Malik, V. S., Popkin, B. M., Bray, G. A., Després, J. P., Willett, W. C., & Hu, F. B. Sugar-sweetened beverages and risk of metabolic syndrome and type 2 diabetes: a meta-analysis. Diabetes care. 2010; 33(11), 2477-2483. https://pubmed.ncbi.nlm.nih.gov/20693348/
- Bernabé, E., Vehkalahti, M. M., Sheiham, A., Aromaa, A., & Suominen, A. L. Sugar-sweetened beverages and dental caries in adults: a 4-year prospective study. Journal of dentistry. 2014; 42(8), 952–958. https://doi.org/10.1016/j.jdent.2014.04.011
- Park, S., Lin, M., Onufrak, S., & Li, R. Association of sugar-sweetened beverage intake during infancy with dental caries in 6-year-olds. Clinical nutrition research. 2015; 4(1), 9. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4337927/
- Smith, P., & Zagorsky, J. L. Poorest Americans drink a lot more sugary drinks than the Richest – which is WHY soda taxes could help reduce gaping health inequalities. The Coversation.com. https://theconversation.com/poorest-americans-drink-a-lot-more-sugary-drinks-than-the-richest-which-is-why-soda-taxes-could-help-reduce-gaping-health-inequalities-142345 July 20, 2020.
- Kuczmarski MF, Mason MA, Schwenk EA, Evans MK, Zonderman AB. Beverage Consumption Patterns of a Low-Income Population. Top Clinical Nutrition. 2010; 25(3):191-201. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2957908/
- Artiga, S., & Orgera, K. Disparities in health and health CARE: Five key questions and answers. Kff.org https://www.kff.org/racial-equity-and-health-policy/issue-brief/disparities-in-health-and-health-care-five-key-questions-and-answers/ March 4, 2020.
- Urban Institute. Soda taxes. Urban.org https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/soda-taxes May 13, 2020.