NCPA - National Center for Policy Analysis

Bloomberg-funded Soda Tax Study Does Not Answer the Relevant Questions

February 24, 2017

Senior Fellow Pamela Villarreal writes at NCPA's Taxes and Retirement blog:

Yesterday, I received an email from Health Affairs linking to some new studies that will run in their upcoming print edition.  One of them, "In Mexico, Evidence Of Sustained Consumer Response Two Years After Implementing A Sugar-Sweetened Beverage Tax," caught my eye for obvious reasons.  First, using soda taxes to reduce the consumption of sugary drinks, which would ostensibly reduce obesity, has been hotly debated in the tax and public health arenas.   Second, the NCPA has published a few pieces on the soda tax issue so any new information is always of interest.

Unfortunately, the new study, funded in part by Bloomberg Philanthropies (yes, founded by NYC's former anti-everything mayor, Michael Bloomberg), didn't tell us anything new about the link between soda taxes, consumption and obesity.  Researchers from Mexico and the United States studied the impact of a countrywide 1 peso per liter soda tax implemented in Mexico in 2014.  They examined data from 6,645 households' store purchases during a four-year period (pre- and post-tax) on their purchases of both taxed and untaxed beverages.  The taxed beverages included carbonated sugary sodas and noncarbonated sugary beverages in both liquid and powder form.  The untaxed beverages were diet sodas, sparkling water, unsweetened fruit juices and unsweetened dairy or substitute dairy beverages.

Results?  In a nutshell, purchases of taxed beverages declined 7.6 percent during the study period while purchases of untaxed beverages increased 2.1 percent.  Households at the lowest income levels had the largest decline in taxed beverages.

So what does this new study tell us?  Nothing that we don't already know:  Excise taxes of all kinds -- whether they be cigarettes, soft drinks or alcohol -- are regressive and affect lower income households the most in terms of cost and purchasing decisions.

In fact, the study poses more questions than it answers:

  • If taxing sugary sodas is a public policy prescription for reducing obesity, why didn't the researchers measure the effect of the tax on obesity rates in the 6,645 household sample?
  • Proponents of soda taxes in the United States point to the evidence in Mexico and say the taxes are working, but how exactly are they "working" to benefit public health if researchers are not measuring obesity or diabetes rates?
  • Are there specific cultural or socioeconomic characteristics of Mexico that might render these results inapplicable to the United States?

Oddly enough, it is difficult to find obesity rates in Mexico in recent years since the soda tax took effect.  The most recent statistic (reported in the Huffington Post) from the United Nations Food and Agriculture Organization states that the obesity rate was 32.8 percent in 2013, surpassing the United States for the first time.  (If anybody out there has updates, please provide a link in the comments below this post.)

But it would seem that if soda taxes are really having an effect in reducing obesity in Mexico, it would be shouted from the rooftops.  But I have read nothing of the sort.  This begs another question:  What is really the goal of soda taxes?  To promote public health or to provide revenue for cash-strapped governments?  I am starting to think it's the latter.


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