Why Tax Soft Drinks?
More than two-thirds of Americans are overweight or obese,1 and soft drinks are the only food or beverage that has been shown to increase the risk of overweight and obesity.2 Obesity alone costs $147 billion a year in medical expenditures, of which half are paid through Medicare and Medicaid.3 Obesity also causes numerous other problems, including reduced self-esteem and lower productivity. Soft drink taxes provide a dual benefit; they could drive down soft drink consumption and generate revenue for much-needed health programs.
Americans Consume Huge Volumes of Soft Drinks
Despite the first-ever per-capita declines in soft drink sales,4 companies still sold more than 14 billion gallons of calorie-laden soft drinks in 2008.5 That is equivalent to about 506 12-oz. servings per year, or 1.4 12-oz. servings per day, for every man, woman, and child. Those drinks include regular (non-diet) carbonated sodas, energy drinks, sports drinks, fruit drinks, ready-to-drink teas, and vitamin waters.
Soft Drinks Contribute to Costly Health Problems
Several scientific studies have shown that soft drinks are directly related to weight gain.6, 7 Weight gain is a prime risk factor for type 2 diabetes, heart attacks, strokes, and cancer. Frequent consumption of soft drinks is also linked to osteoporosis, tooth decay, and dental erosion.8
A Soft Drink Tax Could Raise Substantial Revenues to Fund Health-Promoting Programs
A federal excise tax of 1 cent per 12-oz serving would raise about $1.5 billion per year. Higher taxes, 4 cents or 8 cents per 12-oz serving, would raise $6 billion and $11 billion, respectively. One cent per ounce would raise more than $16 billion in revenue. The tax would reduce consumption and could fund health-promoting programs, such as media campaigns, encouraging physical activity and healthier diets, providing more fruits & vegetables to school children, healthier school meals, state & local departments of health, biking/hiking paths, and inner-city athletic programs.
Many States Already Tax Soft Drinks
At least 34 states levy special taxes on soft drinks (typically a sales tax).9 Some cities also have the authority to levy a soft drink tax. Collectively, they raise well over $1 billion annually. For instance, New York’s tax has been raising several hundred million dollars, and Arkansas has been raising upwards of $40 million. The existing state and city taxes are small and do not significantly reduce consumption. Moreover, little of that revenue is earmarked to promote health (Arkansas has used the revenue to help fund Medicaid).
Time for Action
Health advocates and legislators should work to enact excise taxes on non-diet carbonated sodas, energy drinks, sports drinks, fruit drinks, ready-to-drink teas, and vitamin waters. Those taxes should be large enough to both generate revenues and reduce consumption. The revenue should be earmarked for public health prevention programs, especially in low-income communities. To calculate the amount of revenue your state could raise from different tax rates, use the Liquid Candy Tax Calculator. For more information on tax options, see Key Components of a Soft Drink Tax.
1 Centers for Disease Control and Prevention. Behavioral Risk Factor Surveillance System. Prevalence and Trends Data Nationwide (States and DC) 2007 Overweight and Obesity (BMI). Atlanta, Georgia: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention,
Sept 2008. http://apps.nccd.cdc.gov/brfss/display.asp?cat= OB&yr=2007qkey=4409&state=UB
2 Vartanian LR, Scwartz MB, Brownell KD. Effects of Soft Drink Consumption on Nutrition and Health: A Systematic Review and Meta-Analysis. Am J Public Health. 2007 Apr; 97(4):667-75.
3 Finkelstein EA, Trogdon, JG, Cohen, JW, and Dietz, W. Annual medical spending attributable to obesity: Payer- and service-specific estimates. Health Affairs 2009; 28(5): w822-w831.
4 USDA/Economic Research Service. Beverages: Per capita availability. March 15, 2008.
5 CSPI calculations based on 2008 estimates of beverage categories reported in: Beverage Marketing Corporation. Press Release: Smaller Categories Still Saw Growth as the U.S. Liquid Refreshment Beverage Market Shrank By 2.0% in 2008. March 30, 2009.
Market share of diet and regular soda estimated from 2006 data reported by USDA/Economic Research Service. Beverages: Per capita availability. March 15, 2008. http://www.ers.usda/gov/data/foodconsumption/
6 Vartanian LF, Schwartz MB, Brownell KD. Effects of soft drink consumption on nutrition and health: a systematic review and meta-analysis. Am J Public Health 2007 Apr;97(4):667-75.
7 Malik VS, Schulze MB, Hu FB. Intake of sugar-sweetened beverages and weight gain: a systematic review. Am J Clin Nutr. 2006 Aug;84(2):274-88.
8 Jacobson MJ. Liquid Candy – How Soft Drinks are Harming Americans’ Health. Washington; DC: Center for Science in the Public Interest, June 2005.
9 Chriqui JF, Eidson SS, Bates H, Kowalczyk S, Chaloupka FJ. State Sales Tax Rates for Soft Drinks and Snacks Sold through Grocery Stores and Vending Machines, 2007. J Pub Health Policy. 2008,Jul:29(2):226-49; Jacobson MF and Brownell KD. Small taxes on soft drinks and snack foods to promote health. Am J Public Health. 2000 Jun;90(6):854-7; Brownell KD and Frieden TR. Ounces of Prevention – The Public Policy Case for Taxes on Sugared Beverages. N Engl J Med. 2009 Apr:10:1056.