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Science & the Public

Coming: Hard tax on soft drinks?

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The world is getting bigger. Adults tip the scales way more than they used to. Children are blimping out. And baby fat doesn’t go away — it just morphs into adolescent fat, which then sticks around to become adult fat. Sure, most people exercise less than they should to balance the energy burned against the energy consumed. But one facet of the contemporary diet is taking a disproportionate amount of heat for the expanding-belt syndrome: sugary beverages.

In a commentary released today (ahead of print) by the New England Journal of Medicine, Yale’s Kelly Brownell and New York City’s health commissioner, Thomas Frieden, argue that taxing sugary drinks could go a long way toward putting a brake on obesity. It won’t make fat people slim. But it could slow or prevent plump consumers from ballooning into obese individuals, they argue.

Brownell and Frieden are not proposing a little tax. They’re advocating something that would really catch consumers’ eyes on each grocery or restaurant receipt: perhaps a penny per ounce purchased. Each 32-ounce bottle of sugar-sweetened Coke, Mountain Dew, lemonade, sweetened tea or fruit punch, for instance, would rack up a 32-cent tax. A carton of 12-ounce cans would cost an extra $1.44.

As one might expect, the industry doesn’t buy the arguments that Brownell and Frieden offer.

Explains Susan Neely, president of the American Beverage Association, in a statement issued today: “We agree that obesity is a serious and complex problem. It defies both science and common sense, however, to think singling out one product as a unique contributor to obesity will make a dent in the problem.” Moreover, she argued: “Taxing these products won’t make an ounce of difference in reducing obesity. But these taxes will inflict serious pain to hard-working families, who face higher costs at the store and the risk of losing their job all in the middle of a devastating recession.”

Brownell and Frieden acknowledge that some people will likely view the idea of a new excise tax as regressive — hurting those at the bottom of the income pyramid more than those at the top. But keep in mind, Brownell says, sugar-sweetened beverages are not dietary staples. Studies have shown that people are likely to cut back on consumption of junk foods and drinks as their prices rise even as purchases of milk, bread or flour hold relatively steady in the face of escalating prices.

One analysis by Brownell’s Rudd Center for Food Policy and Obesity indicated that for every 10 percent rise in the price of sugary drinks, consumption of those drinks falls by 7.8 percent. In their new commentary, Brownell and Frieden point to industry data that suggest there could be an even stronger push back: that every percent rise in cost translates into at least as large a percentage drop in consumption.

But this tax really makes for good public policy, Brownell contends, “when the revenue that is generated is used for nutrition-related programs. And the best of all would be to use revenues to subsidize the cost of fruits and vegetables.” He suggests that these subsidies might be targeted at farmers, middlemen or even at schools (so that they could buy fresh produce).

Some would propose a bigger tax
A proposed beverage tax is hardly new. “I wrote about this in an Op-Ed for the New York Times 15 years ago,” Brownell points out. “What’s makes this idea sort of have legs at the moment,” he contends, “is the terrible economy. States need the revenue.”

Although Barry Popkin, an economist and nutrition epidemiologist at the University of North Carolina, believes Brownell and Frieden are on the right track, “A penny an ounce tax is not enough,“ he says. “From my work on price dynamics and elasticities and changes in caloric intake in a number of countries, that tax would be too small to have much effect on consumption patterns.”

What data do show, he notes, is that “there have been increases in consumption of caloric beverages seen across every age group in the United States.” Since the late 1970s, he says, “We have increased by several hundred calories a day our intake of caloric beverages. They now account for 20 to 25 percent of calories consumed.” Those statistics come in part from a paper he published last year in the American Journal of Clinical Nutrition.

The health impacts of this trend are huge, Popkin argues. “We have close to a consensus among obesity and dietary researchers, that when you consume a caloric beverage, you do not reduce your food intake. It could be orange juice, beer, wine, lattes or sugary beverages." He says these drinks "account for, in the estimate of many scholars, two-thirds of the weight increases that Americans have experienced in the last 20 years.” And that's why he would not restrict a beverage tax to drinks in which sugar has been added. The body doesn't know the difference, he says, so he would extend a tax to fruit juices too.

Relative to other countries, he says — including France and Mexico — “the United States is behind the curve on taking serious action against sugary beverages. In fact, we’re about the only major country to have not yet taken any serious national action against these beverages.” In some countries, he says, television advertising for sweet drinks is banned, sweet beverages are kept out of schools, and health campaigns are being developed that would recommend parents restrict beverages in the home to skim milk, water, and at most a small glass of fruit juice each day.

Some taxes already in place
At least 40 states have already enacted small taxes on soft drinks — typically on the order of a half-cent per dollar — “just to raise revenues,” Brownell says. “They were never intended as a means of affecting consumption. So most consumers don’t even know these taxes exist.”

New York had proposed an 18 percent tax on the purchase price of sugary drinks, but withdrew it a few months back. Indeed, Brownell says, “it’s still a political football.” The governor realized he “was losing political capital,” the Yale psychologist says. “We’re hoping this proposal gets reintroduced.”

But he also sees some problems with New York’s tax strategy. For instance, when there’s a sale on beverages, the tax bite will also fall, removing the intended economic signal. This tax would also be included in the price of goods, so it wouldn’t show up on the cash-register receipt, which would further isolate consumers from the intended economic signal. Finally, he notes, a purchase-price-related tax might drive people to buy affected beverages in larger quantities, where the overall cost per ounce tends to be lower.

As Neely noted, a host of issues contribute to the obesity problem, Brownell says. However, he maintains, “the science linking soft drinks to bad health is consistent and robust. And is stronger than exists for any other categories of foods.” Like fats, I asked him? “Well, to some extent those other things haven’t been studied as much. But that’s why the soft-drink link pops up: It’s the most defensible thing from a scientific point of view.”

Your ideas?

Coming soon: What does the science say?

Citations

Brownell, K.D. and T.R. Frieden. 2009. Ounces of Prevention — The Public Policy Case for Taxes on Sugared Beverages. New England Journal of Medicine (in press). DOI: 10.1056/NEJMpo902392

Forshee, R.A., P.A. Anderson, and M.L. Storey. 2008. Sugar-Sweetened Beverages and Body Mass Index in Children and Adolescents: A Meta-Analysis. American Journal of Clinical Nutrition 87(June):1662.

Duffey, K.J. and B.M. Popkin 2008. High-Fructose Corn Syrup: Is This What’s for Dinner? American Journal of Clinical Nutrition 88(suppl):1722S.

Vartanian, L.R., M.B. Schwartz and K.D. Brownell. 2007. Effects of Soft Drink Consumption on Nutrition and Health: A Systematic Review and Meta-Analysis. American Journal of Public Health 97(April):667. [Go to]
Further Reading

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