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28 February 2020

A US city's short-lived 'soda tax' cut consumption and raised nearly R1 billion

According to a new study, the evidence suggests that taxes on sweetened beverages may be an effective policy tool for reducing sweetened beverage consumption.

Chicago's brief and now-defunct soda tax did cut the consumption of sugar-sweetened drinks, a new study finds, along with raising funds for public health initiatives.

From August to November 2017, when the tax was in effect, the volume of soda sold in Cook County dropped 21% and the tax raised nearly $62 million, nearly $17 million of which went to a county health fund.

"The evidence suggests that taxes on sweetened beverages may be an effective policy tool for reducing sweetened beverage consumption," said lead researcher Lisa Powell. She's director of health policy and administration at the University of Illinois at Chicago's School of Public Health.

"The evidence also shows that households will undertake tax avoidance strategies, such as cross-border shopping, which will dampen the impact of the tax," Powell said.

No nutritional value

The Cook County levy was one cent per ounce on sodas and other sugar-sweetened drinks. After two months, pressure from the public and extensive lobbying by the American Beverage Association forced the Cook County Board of Commissioners to rescind the tax, the Washington Post reported.

Samantha Heller, a senior clinical nutritionist at New York University Medical Center in New York City, said research has found a strong association between the consumption of sugar-sweetened beverages and type 2 diabetes, obesity, heart disease, kidney disease, tooth decay and gout.

"These beverages taste good but are loaded with calories and have virtually no nutritional value," she said. "Do we really want our kids, family members or ourselves suffering from preventable chronic illnesses when we can easily drink other beverages?"

The jury, however, is still out on whether cutting back on these drinks will have an impact on the obesity epidemic and its consequences.

"We do not have enough data yet to say for sure that soda tax reduces the risk of chronic diseases," Heller said.

One can hope that fewer purchases result in less consumption, which could ultimately help reduce the rates of obesity and chronic diseases like type 2 diabetes, she said. "But these conditions take years to develop, and thus it may take years to assess the effects of a soda tax," Heller said.

More responsive to price increases

For the study, Powell's team used data from supermarkets, grocery, convenience stores and other outlets in Cook County, Illinois, comparing that data with St. Louis City and County, Missouri, where there was no tax.

The researchers also found no significant increase in purchases of untaxed drinks.

Objections to taxing sugar-sweetened drinks include that the tax is regressive and affects poorer consumers most, and also that it's an example of the "nanny state" trying to limit choices.

Powell said, "Lower-income individuals are more frequent consumers of sugary beverages and therefore disproportionately bear more of the harms associated with consuming sugary beverages."

Lower-income consumers also tend to be more responsive to price increases and will reduce their consumption of sugary drinks to a greater extent than higher-income people and, in turn, will benefit more from the associated health benefits of reduced consumption. "Thus, while the tax may be economically regressive – from a health perspective it is progressive," she said.

Negative health consequences

It is not the government's business to determine what people drink, Powell said. "But governments do play a role in helping to correct what economists call 'market failures' that may lead consumers to over-consume certain products, such as sugary drinks or tobacco," she noted.

The goal of the tax is to help offset the negative health consequences that are associated with these drinks, which end up being paid for in part by other tax revenue, Powell said. "We have seen this same policy used as a means to help reduce smoking," she added.

No states have a tax on sugar-sweetened drinks. But the cities of Boulder, Colorado; Philadelphia; Seattle; and four California cities: Albany, Berkeley, Oakland, and San Francisco, do tax these drinks.

If you like bubbly drinks choose seltzer, Heller said. "Choose plain or flavoured seltzers or add a few tablespoons of 100% juice or an herbal tea for flavour. Water, tea and unsweetened plant-based milks are also good options," she advised.

The report was published online in the Annals of Internal Medicine.

Image credit: iStock

 
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