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Taxes on Sugar-Sweetened Beverages

  • Date: Oct 30 2012
  • Policy Number: 20122

Key Words: Diabetes, Dental Health, Research

APHA Policy Statement 20072 – Addressing Obesity and Health Disparities Through Federal Nutrition and Agricultural Policy

APHA Policy Statement 2005-8 – Supporting the WHO Global Strategy on Diet, Physical Activity and Health

APHA Policy Statement 200317 – Food Marketing and Advertising Directed at Children and Adolescents: Implications for Overweight

Decisive public health policy measures must be implemented to counteract the rising rates of sugar-sweetened beverage (SSB) consumption among children and adults in the United States. Consumption of these drinks is a significant contributor to the obesity epidemic and increases the risk of type 2 diabetes, heart disease, and dental decay. Sugar-sweetened beverages contribute 48% of added sugars to our diets, and soda alone is the single largest contributor of added sugar. Consumption of sodas is decreasing slightly, but consumption of ready-to-drink teas, energy drinks, and sports drinks is increasing. Diseases that have been linked to SSB consumption take a toll on the health and well-being of the American population and add significantly to rising health care costs. Reversing the obesity epidemic will take efforts in both the child and adult populations. Focused efforts must be undertaken to prevent obesity in children, as consumption patterns and weight trajectories are set early in life. In addition, recent research documents that SSBs are marketed aggressively and relentlessly to this age group. A tax on SSBs could discourage purchasing of these drinks by adults, young adults, and children, as well as raise funds for obesity prevention in children.

Problem Statement
Definition: For the purposes of this document, we define sugar-sweetened beverages (SSBs) as beverages to which caloric sweeteners are added by the manufacturer or bottler. These beverages include bottled carbonated soft drinks (soda); fruit, sports, and energy drinks; enhanced waters; and sweetened teas as well as sugar-sweetened syrups that are used to make nonbottled SSBs (e.g., fountain drinks and sugary drinks containing coffee). Calorically sweetened milk beverages other than coffee/espresso, infant formula, dietary aids, and 100% fruit or vegetable juices are not included in this definition. The reason for excluding milk beverages, infant formula, and dietary aids is that they are considered to be healthful and necessary supplements to some diets. Pure fruit and vegetable juices are excluded because they contain no added caloric sweeteners.

Adverse health outcomes associated with SSB consumption: Roughly two thirds of adults are overweight, and nearly 36% of adults are obese.1 Among youth between the ages of 2 and 19 years, nearly 17% are obese.2 There is strong scientific evidence linking SSB consumption to obesity and other adverse health outcomes.3–5 For each additional soda a child drinks daily, his or her risk of obesity increases 60%.6 Individuals who drink one to two SSBs per day are 27% more likely to be overweight or obese regardless of income or ethnicity.7 A number of studies have documented a link between SSB consumption and cardiovascular risk8,9 and higher blood pressure,10 particularly among individuals who also consume higher amounts of sodium.11 Women who drink more than two SSBs per day have a 40% higher risk of heart disease than those who do not.12 An estimated 100,000 cases of diabetes over the past decade were caused by increased SSB consumption.13 Dental health is also negatively influenced by SSB consumption. Studies have shown that soda consumption nearly doubles the risk of dental caries in children14 and increases the likelihood of caries in adults.15

Consumption trends: Despite the adverse effects of drinking SSBs, their consumption rate has more than doubled over the last 30 years,16 with the average American now drinking 45 gallons annually.17 One study showed that 44% of toddlers aged 19–24 months drink a sugary drink every day, and this prevalence rises to 70% among 2–5-year-olds.18 From 1977 to 2006, the biggest beverage consumption shift among children aged 2 to 18 years was an increase in SSB consumption from 87 to 154 calories per day.16 During the 1990s, teens began drinking more SSBs than milk for the first time; today, 13% of teen calorie intake comes from soda.18 Forty-three percent of the increase in daily calories Americans consumed between 1977 and 2001 came from SSBs alone.3 Energy consumed as a beverage is believed to be less satiating than energy consumed as solid food, and the body does not adjust for the liquid intake. Liquid calories, therefore, add to total energy intake rather than displacing other sources of calories.19

The 2010 Dietary Guidelines for Americans recommend reducing intake of calories from added sugars and note that the major sources of added sugars in the diets of Americans are soda, energy drinks, and sports drinks (36% of added sugar intake); grain-based desserts (13%); sugar-sweetened fruit drinks (10%); dairy-based desserts (6%); and candy (6%).20

Negative economic impact: These adverse health outcomes and rising consumption trends become problems for which society as a whole, and not only consumers, must pay. For example, diabetes- and obesity-related health care costs caused by excessive intake of SSBs are not reflected in the price of SSBs. Conditions caused by overweight and obesity account for as much as $168 billion per year, or 16.5% of total US medical expenditures.21 Approximately one half of these costs are paid for through taxpayer-funded Medicare and Medicaid programs and through higher insurance payments in private plans.22

Marketing to children: Beverage companies spent $948 million in 2010 to advertise SSBs in all measured media.23 By contrast, the government spends only a small amount of money on promoting healthy nutrition to children.24 Exposure to TV ads for SSBs is associated with higher consumption of these products,25and beverage companies spend more on marketing them to children and adolescents than they do with any other food category. Marketing of SSBs is no longer limited to television and radio but is now done on the Internet, in social media such as Facebook, and on mobile media. There is evidence that SSB marketing targets Black and Hispanic youth.23

Ethical issues: Sugar-sweetened beverage taxes have drawn criticism for being regressive. A similar argument was raised concerning tobacco taxes but was challenged by proponents who pointed out that the poor face a disproportionate burden of smoking-related illnesses. Similarly, low-income people suffer higher rates of obesity and other adverse health consequences as a result of poor diets.26 Thus, a tax on SSBs, if it helped reduce consumption, could be of greater benefit to lower-income populations. Revenues could be used for health programs to benefit those most in need.

Proposed Recommendations Statement

In order to raise significant funds for obesity prevention and to reduce the consumption of sugar-sweetened beverages, the American Public Health Association should support federal, state, and local governments in enacting excise taxes, which would raise the average price of all sugar-sweetened beverages. The most commonly proposed tax amount, a penny per ounce, would raise the price approximately 20%. Such a tax could raise more than $13 billion in 2012 in all states combined and a significant amount of revenue in each individual state.27 For example, in California, a tax at that level could raise more than $1.1 billion per year; in Mississippi, more than $136 million; in Massachusetts, close to $280 million; and, in Nebraska, almost $100 million.28 The tax should be passed on to consumers, and revenue raised should be dedicated to a variety of evidence-based child and adult obesity prevention programs. APHA recommends that, in writing statutes, jurisdictions use the model language set forth by ChangeLab Solutions.29

Research has shown that sugar-sweetened beverages are price elastic: it is estimated that every 10% increase in price would decrease consumption by 10%.26 A recent study revealed that a penny-per-ounce tax would reduce consumption by 15% among adults 25–64 years of age and prevent 2.4 million diabetes person-years, 95,000 coronary heart events, 8,000 strokes, and 26,000 premature deaths. It would avoid more than $17 billion in total medical costs.27 Research also shows a beneficial effect of a soda tax on body mass index (BMI) in overweight and low-income children.30 However, a reduction in consumption is likely only if consumers are aware of the price increase before they purchase the product, making an excise tax preferable to a sales tax. An excise tax would be levied on the beverage manufacturer, which would pass the cost on to consumers, resulting in a higher shelf price. A price increase through sales tax would be noted only by a vigilant customer who reads the register receipt after purchasing the product.31

Opposing Arguments/Evidence

  • Unlike tobacco and alcohol, food is essential to life and should not be taxed. 
    Rebuttal: Food is essential to life, but SSBs are not. SSBs are a food-like substance that contribute only empty, nutritionless calories to the diet and exacerbate many chronic health problems. There are many other no- or low-calorie drinks available.
  • An SSB tax will not solve the obesity epidemic, which is a multifactorial problem. 
    Rebuttal: A tax is not intended to single-handedly reverse the epidemic. However, it would provide a large amount of funding for programs that could reverse the trends in obesity. The tax is just one part of a comprehensive obesity strategy.
  • The source of calories in a diet is not important, and it is unfair to target sugar-sweetened beverages. 
    Rebuttal: As stated above, the body does not respond to liquid calories in the way it responds to solid calories. Thus, SSBs “trick” the body’s food regulation systems.
  • Individuals will just switch to other types of sweetened beverages, making the tax ineffective. 
    Rebuttal: Even if individuals switch to 100% juice or chocolate milk, this would be an improvement, as those beverages contribute some nutrients to the diet. 
  • The key to combating obesity is increased physical activity. 
    Rebuttal: Physical activity is important, but each time one consumes a bottle of an SSB, one would have to run for almost an hour to offset the increase in calories. Thus, it is unlikely most Americans would be able to burn off the calories from daily consumption of SSBs.
  • The science linking SSB consumption to obesity and other diseases is unclear. 
    Rebuttal: The science is very clear, as indicated above. Studies that have cast doubt on this connection are usually funded by industry. This conflict of interest casts doubt on their results.
  • The tax revenue will likely be used for government spending in other areas outside of obesity prevention. Thus, it will have less of an effect. - Rebuttal: If dedicating revenues to obesity prevention is not possible in a given state, an impact on overweight and obesity can be assured by making the tax large enough to affect consumption. 
  • SSB taxes are regressive. 
    Rebuttal: Obesity, diabetes, and heart disease are regressive diseases; that is, low-income communities suffer disproportionately higher rates of chronic illness. Because low-income populations have less money to spend on groceries, SSB taxes can potentially have a greater effect on consumption in this population. In addition, revenue raised can be used for obesity prevention programs specifically targeted toward low-income communities. 
  • The beverage industry is doing its part to prevent obesity 
    Rebuttal: The industry uses its money and significant political influence to convince both policymakers and the general public that it “cares” about the health of its customers. But the industry must always answer to its shareholders by increasing profits, and therefore it continues to relentlessly market its sugar-sweetened beverages to boost sales.

Alternative Strategies
Many cities around the country, including New York, Los Angeles, and Boston, have launched media campaigns to discourage SSB consumption. These campaigns are limited by available public health funds. An SSB tax could fund such campaigns.

It may also be useful to combine an SSB tax with educational messages. For instance, placing a label on drinks that are taxed and explaining why they are taxed could enhance the effectiveness of the tax.

In addition, a growing number of state and local governments around the country are enacting policies to prohibit public funds from being used for the sale or serving of SSBs on public property. These strategies, in combination with an SSB tax, have the potential to decrease consumption of these beverages.

Action Steps

  • Local, state, and federal governments should impose excise taxes on all sugar-sweetened beverages and dedicate the funds generated to obesity prevention efforts. 
  • The public health community should collaborate with the Centers for Disease Control and Prevention (CDC), the Centers for Medicare and Medicaid Services, philanthropic foundations, and other interested agencies, institutions, and organizations to monitor the impact of such a policy. 
  • The public health community should work with the National Conference of State Legislatures, the United States Conference of Mayors, the National Governors Association, and others to promote this policy.


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