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Home--News
Soft-Drink Tax Could Pare Waistlines, Cover Health-Care Costs
By Elizabeth Lopatto
Bloomberg
September 16, 2009
Sept. 16 (Bloomberg) -- A penny-per-ounce tax on soda and other sugary
drinks would raise about $150 billion over a decade while slimming
Americans' waistlines, according to a report from public health and
economic researchers.
If sugar-sweetened beverages from makers including Coca- Cola Co.
and PepsiCo Inc. were taxed at that rate, the U.S. could raise $14.9
billion in the first year, according to the article in the New England
Journal of Medicine. The tax would also encourage people to cut back
on soft drinks, cutting their daily calorie intake by at least 10
percent, the authors said.
The rate of obesity, a major cause of diabetes, stroke, and heart
attacks, has more than doubled in the last 30 years, according to
the U.S. Centers for Disease Control and Prevention. Soda and other
sugary drinks have been linked to more calories eaten, leading to
more pounds, according to background information in the report.
"If you take diseases related to diet, with obesity as the most visible,
where do you start?" said Kelly Brownell, the report's lead author
and director of Yale University's Rudd Center for Food Policy and
Obesity. "We thought we'd start where the science is strongest. Liquid
calories are a target because the body has trouble understanding those
calories in a way that allows you to regulate body weight."
'Outrageous'
Coca-Cola Chairman and Chief Executive Officer Muhtar Kent called
the idea of a federal tax on soft drinks "outrageous" on Sept. 14
in response to proposals in Congress. "I have never seen it work where
a government tells people what to eat and what to drink," Kent said.
President Barack Obama has said that taxing sugar-sweetened beverages
to reduce consumption should be explored, in an interview from the
Oct. 15 issue of Men's Health magazine. The proposal has been debated
by the Senate Finance Committee. New York Governor David Patterson
proposed an unsuccessful 18 percent tax on sugar-sweetened drinks
earlier this year.
"This would reduce soda consumption by a faction, and sodas are less
than 10 percent of the obesity equation," said J. Justin Wilson, a
senior research analyst at the Center for Consumer Freedom, a nonprofit
organization involved in nutrition issues that receives some food-industry
funding. "What this really boils down to is searching through the
couch cushions for revenue."
Medical spending for obesity is estimated to have reached $147 billion
in 2008, according to a July 27 article in the journal Health Affairs.
32 Percent Obese
About 32 percent of American adults are obese, according to data from
the CDC's Web site. A person is obese if their body mass index is
greater than 30, which corresponds to 186 pounds for a person who
is five feet, six inches tall.
Today's report cited one study that found 323 adults who added sugared
beverages to their meals simply increased calorie intake, instead
of substituting for other calories. Another study showed that children
who drank 9 ounces or more of sugary liquids consumed 200 calories
a day more than those who didn't.
Proposed taxes should be levied on producers and wholesalers of sugary
drinks, which include those sweetened by high fructose corn syrup
and fruit-juice concentrate, according to today's report. That may
ensure the price increase is passed on to retailers. In addition,
the states that exempt sugar- sweetened beverages from tax along with
food should eliminate the practice, the authors said.
Taxing sugary drinks, which include those sweetened by high fructose
corn syrup and fruit-juice concentrate, by the ounce means that those
who currently drink a lot of sweetened drinks would be taxed more.
This could encourage them to cut back on the sweetened liquids, the
authors suggest.
Fewer Calories
If consumers were to drink one fewer 20-ounce drink daily in response
to the tax, each would consume about 174 fewer calories a day, the
authors wrote.
"It has to be a big enough tax that there will be a significant price
increase," said study co-author Frank Chaloupka, a professor of economics
at the University of Illinois, Chicago. "The thing that has to be
kept in mind is that the tax itself isn't the single thing to cure
obesity. Part of it is what we do with the revenue it generates."
The report doesn't make specific proposals about how the revenue should
be spent other than to say it may "help the nation recover health-care
costs associated with the consumption of sugar-sweetened beverages."
State Tax
Thirty-three states already have sales taxes on soft drinks, averaging
5.2 percent, which is too low to discourage consumption, the report
said. The penny-per-ounce tax proposed in today's report would amount
to a 15 percent to 20 percent increase in price, and could raise $937
million in New York, $1.2 billion in Texas, and $1.8 billion in California,
the authors wrote.
That price increase would translate to about a 10 percent decrease
in calorie intake for most people, Chaloupka said. A smaller tax wouldn't
have enough of an effect, he said.
"While the authors suggest a 1 cent-per-ounce tax on any beverage
with caloric sweeteners, there is no science to support that this
would have measurable impact on our nation's waist- line," Susan Neely,
the president of the American Beverage Association, said in an e-mailed
statement. "Our industry has reduced calories per ounce produced by
more than 24 percent since 1998, yet obesity rates continued to climb."
Other authors on the today's report include researchers at the Harvard
School of Public Health, the New York Department of Health and Mental
Hygiene and other universities. Funding for the research came from
the Rudd Foundation, the National Institutes of Health and the Robert
Wood Johnson Foundation.
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