A sugar tax (also called soda tax) is a surcharge on sugar-sweetened beverages (SSBs) and sometimes other sweetened snacks. In addition to soda, SSBs may include sports, energy, and fruit drinks; flavored waters; presweetened coffee and tea; and any of these mixed into alcoholic beverages.
The primary purpose of a sugar tax is to discourage consumption of SSBs, one of the major contributors to the global epidemics of obesity and type 2 diabetes especially in children. SSBs also promote tooth decay and may increase the risk of heart disease, the number one cause of death in the United States. The average American consumes 39 lb. (18 kg) of sugar annually, with more than 200 calories daily from soda and other SSBs—a four-fold increase since 1965. Although the sugar content of SSBs varies, a typical soda has 7 tsp. (30 g) per 8 oz. (237 mL), sweetened iced tea typically has half of that, and flavored water about a third. This added sugar has no nutritional benefit, and some experts classify it as an addictive substance or even a toxin. The 2015–2020 Dietary Guidelines for Americans, as well as the World Health Organization (WHO), recommend limiting added sugar to less than 10% of daily calories—about 12 tsp. (50 g) or 200 calories in a 2,000-calorie diet. The American Heart Association recommends limiting children and teens to 6 tsp. (25 g) daily. A secondary purpose of a sugar tax is to raise government revenue.
Sugar taxes have been predicted to increase healthy longevity and to save more money in future healthcare costs than the cost to implement. Furthermore, the tax can provide a strong social signal for reducing sugar consumption. Advocates argue that sugar taxes are especially helpful for lower-income families who have higher rates of obesity, diabetes, heart disease, and other health problems. The Childhood Obesity Intervention Cost-Effectiveness Study (CHOICES) analyzes the health impact and cost-effectiveness of sugar taxes. It reported that a 1¢-per-oz. Illinois state SSB tax could raise $651 million annually in new revenue, prevent 116,000 cases of obesity, and save $733 million in healthcare costs over 10 years.
Sugar taxes are “sin taxes,” similar to taxes imposed on tobacco products, alcohol, and marijuana. They vary considerably in:
The first U.S. sugar tax, an SSB sales tax of 1¢ per oz., was approved by Berkeley, California, voters in 2015. A Navajo Nation sugar tax followed shortly. Voters in San Francisco, Oakland, and Albany, California, and Boulder, Colorado, approved sugar taxes in 2016 elections. A 1.5¢-per-oz. tax on all nonalcoholic beverages with any sugar-based sweetener or artificial-sugar substitute was approved by the Philadelphia City Council and took effect in 2017, along with tax credits for businesses selling healthy beverages. The projected $90 million in annual revenue funds were intended go toward universal prekindergarten, community schools, and parks and recreation centers. A 1.75¢-per-oz. tax passed by the Seattle City Council took effect in 2018. It exempts SSB manufacturers with annual gross revenues of $2 million or less and taxes those with $2–$5 million in revenue at 1¢-per-oz. The Board of Cook County, Illinois, which includes Chicago and a population of more than 5 million, enacted a sugar tax in 2017, but withdrew it after a few months due to opposition from businesses.
The WHO recommends nations adopt SSB taxes in the range of 20%–50%, along with financial subsidies for healthy foods such as fresh fruits and vegetables. As of 2018, 26 countries had instituted sugar taxes, and they were under consideration in several more. Mexico, with the world's highest SSB consumption at 43 gals. (163 L) per person annually and one of the highest overweight/obesity rates, adopted a 10% or 1-peso-per-liter tax in 2014. In 2018, the United Kingdom implemented a 20% SSB tax on total sugar content above 5 g (0.2 oz.) per 100 mL (3 fl. oz.). Milkbased drinks, which can contain up to twice the sugar as soda, are exempt. The tax was estimated to raise about £520 million ($735 million) per year to fund primary-school sports. A 2016 survey found that a significant minority of consumers wanted the tax extended to candy, cakes, and sweetened breakfast cereals.
The beverage industry, especially “Big Soda,” has fought sugar taxes with marketing campaigns and lawsuits. Between 2011 and 2015, the two largest U.S. beverage companies gave multimillion dollar sponsorships to organizations fighting obesity, while lobbying against legislation aimed at reducing soda consumption; in return, some sponsored organizations opposed the legislation. Industry has outspent tax supporters and health groups about two-to-one in opposition to ballot initiatives. Former New York City Mayor Michael loomberg's 2012 ban on high-sugar “super-sized” sodas led to protest marches and a lawsuit that struck it down. Since then, Bloomberg's philanthropies have contributed millions of dollars in support of sugar taxes around the country. The fight over Philadelphia's tax lasted over three years, involving politicians as well as industry. As of 2018, the tax was being appealed to the state supreme court.
Industry and other critics have argued that sugar taxes are regressive, target low-income consumers and small businesses, and cost jobs. They argue that beverage choices and their health impacts are matters of personal responsibility or that sugar taxes are ineffective; however, proponents say that if this were true, beverage companies would not be fighting so hard. A predicted backlash—people buying up large quantities of SSBs before a tax takes effect or driving to stores outside of the tax's reach—has not materialized.
Initial results suggest that sugar taxes are effective for both reducing consumption and bringing in revenue.
While continuing to argue that a narrow SSB tax would not go far toward solving the obesity crisis, Coca-Cola introduced three new reduced-sugar nondairy beverages ahead of the new tax in the United Kingdom. The company predicted that 50% of its revenue growth will come from new products or innovations.
Even without a sugar tax, U.S. SSB consumption has been declining since 1998. Per capita consumption of sodas and energy drinks fell to 642 8-oz. servings in 2016, the lowest since tracking began in 1985. A 2015 Gallup poll reported that most Americans were attempting to avoid soda. Meanwhile, total sales revenues increased as beverage makers pushed smaller packs at higher prices. In addition to smaller sizes, soda makers were relying on premium packaging and noncarbonated and sugar-free drinks.
Some U.S. cities have banned SSB sales on municipal properties. Warning labels may also be effective. In the name of free speech, the American Beverage Association asked for a temporary injunction against a San Francisco law requiring warning labels on SSB outdoor advertisements. After a review of the scientific evidence of the association between SSBs and obesity, diabetes, and tooth decay, a court denied the injunction. As of 2018, proposed warning labels on SSB containers were pending in several state legislatures. Online surveys indicate that such labels would indeed affect consumer choice.
A 2016 report from the Urban Institute suggested that taxing SSBs according to sugar content would be the most effective, with an overall 25% reduction in sugar consumption, compared to a 22% reduction with a per-oz. tax. It also might encourage the manufacture of healthier beverages with reduced sugar. If the primary goal is revenue, however, taxing by volume or sales value might be more lucrative.
A 2017 Australian study suggested that a package of taxes on sugar, salt, and fat, with subsidies for fruits and vegetables, would yield significantly greater healthcare benefits and save billions of dollars in healthcare costs compared with a single sugar tax.
A 2017 review in the Annals of Internal Medicine argued that recommendations for limiting sugar consumption were based on “low-quality” evidence. The review, however, was funded by a group with financial ties to large food and beverage companies, and its conclusions were disputed in an accompanying editorial. The review has been compared to the tactics used by tobacco companies to deny the evidence of harm from smoking.
See also Artificial sweeteners ; Childhood obesity ; Obesity ; Sugar ; Sugar sweetened beverages .
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Margaret Alic, PhD