Maybe a Soda Tax Wouldn’t Work?

Those who worry about a major role for sugary sodas (e.g. Coca-Cola, Pepsi) in childhood and adult obesity have suggested a tax on such drinks; the idea is to obtain some revenue and, at the same time, reduce obesity. However, a study reported in the journal Contemporary Economic Policy throws cold water on the idea.  It’s an analysis of population weight changes during the last 16 years that a number of starts have been taxing soft drinks. 

Various forms of taxation of sodas have been instituted in as many as two-thirds of the US states.  Currently, the average tax rate on soft drinks is about 3%.  Although consumption is slowed somewhat, the effect on body mass index (BMI) is slight.  For example, a 1% tax increase causes an average BMI decrease of 0.003 points – less than a tenth of a pound for an average man.

An expert has stated that “the average American drinks 50 gallons of sugared beverages annually.  A regular 20-ounce soda contains 17 teaspoons of sugar and 250 calories.”  Obviously, a ‘sin’ tax on sugar or sugary sodas is appealing.  But the findings of this study suggest that 3% isn’t doing much good.  To be effective, the tax rate must be higher.  The effect on the cost of living would probably be higher than the benefit to the average population weight.