NCPA - National Center for Policy Analysis


March 27, 2009

Soft drink consumption has been hypothesized as one of the major factors in the growing rates of obesity in the United States.  Nearly two-thirds of all states currently tax soft drinks using excise taxes, sales taxes or special exemptions to food exemptions from sales taxes to reduce consumption of this product, raise revenue and improve public health.  Although there is extensive research on the impact of alcohol and tobacco taxes, there is little research regarding the influence of soft drink taxes.  A new study fills in those gaps.

Researchers analyzed the impact of these tax rates from 1990 to 2006 on changes in body mass index (BMI) and obesity; during this time period, approximately half of all states change their soft drink tax rate.  They were able to identify the impact of soft drink tax rates on individuals' weight from changes in the tax rate within states over time.

According to the researchers:

  • An increase of 1 percent in the state soft drink tax rate leads to a decrease in BMI of .003 points.
  • The influence of soft drink taxes varies across demographic groups; soft drink taxes have a larger influence on BMI and obesity for low income adults and Hispanics.
  • Yet, with an average of 3 percent, the behavioral response of adults is small in magnitude.
  • Moreover, these results suggest that even a relatively large increase of approximately 20 percentage points, as recently proposed by Maine, may not have a substantial effect on population weight.

However, reducing soft drink consumption may lead to improvement in areas like dental health.  And an increase in the tax would likely raise considerable revenue for the federal and state governments.  The downside of the policy of is the likelihood that the tax is regressive, say researchers.

Source: Jason M. Fletcher, David Frisvold and Nathan Tefft, "Can Soft Drink Taxes Reduce Population Weight?" Emory Economics (Emory University), October 2008.


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