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Sugar sweetened beverage taxes

Health Factors: Diet & Exercise
Decision Makers: Local Government State Government Federal Government
Evidence Rating: Some Evidence
Population Reach: 100% of WI's population
Impact on Disparities: Likely to decrease disparities

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Adding an excise tax (a fee per ounce) or a sales tax (a percentage of the product’s price) to the current price of soda or other sugar sweetened beverages increases the price of those beverages. Funds generated by this tax may be used to subsidize healthy foods or to support other public health ventures.

Expected Beneficial Outcomes

Reduced sweetened beverage consumption
Improved weight status
Reduced obesity rates

Evidence of Effectiveness

There is some evidence that sugar sweetened beverage (SSB) taxes decrease consumption of soda and other sweetened beverages, although current tax levels are generally too low to significantly affect consumer behavior (Niebylski 2015AHA-Mozaffarian 2012Novak 2011, Powell 2013, Finkelstein 2013, Dharmasena 2012). SSB taxes increase the price of beverages for consumers (Cawley 2015); taxes that change the relative prices of healthy and unhealthy foods have been shown to affect both consumption patterns and obesity levels (Eyles 2012, Urban-Engelhard 2009). However, additional evidence is needed to confirm effects.

Current soda tax levels, typically 4% or less, may not substantially reduce consumption overall (Sturm 2010), but may benefit at-risk children (Sturm 2010) and have a small effect on adults’ weight (Fletcher 2010a). Existing soda taxes do not appear to be associated with adolescent body mass index (BMI) (Powell 2013, Powell 2009). Reductions in child and adolescent soda consumption may be offset by increases in consumption of other high calorie drinks if taxes are too narrow in scope (Fletcher 2010b, Cawley 2015). Taxes in small geographic areas may also have minimal effects on consumption, since consumers can easily purchase SSBs in neighboring areas without such taxes (Cawley 2015).  

Higher magnitude effects could occur if taxes were higher than current levels (Powell 2013, Powell 2009, Todd 2010, USDA-Smith 2010, Kuchler 2005a). Estimates suggest that raising the cost of SSBs by 20% would decrease calorie consumption and result in weight loss, ranging from 1.5 to 3.8 pounds per year for adults (Novak 2011, Finkelstein 2013, Dharmasena 2012, USDA-Smith 2010). Increasing the cost of SSBs by 20% could also increase the consumption of non-sugar sweetened beverages such as low fat milk, fruit juice, coffee, and tea (Dharmasena 2012).

A Mexico-based study suggests that price increases from soda taxes are fully passed on to consumers (NBER-Grogger 2015). Berkeley, California’s city-level tax on SSBs, however, resulted in consumer price increases of less than half the amount of the tax, perhaps due to store owner concerns about consumers shopping in other cities (NBER-Cawley 2015). A 0.5 cent per ounce soda tax is estimated to generate $5.8 billion annually in tax revenue (Lin 2011), which could improve nutrition by providing subsidies for fruits and vegetables (French 2001) or supporting nutrition education and obesity prevention programs (Kuchler 2005a, Niebylski 2015).

Price changes are likely to have a greater effect on the purchasing decisions of low income families than higher income families, as low income families spend a larger portion of their income on food (Rudd-Friedman 2012), and the decision making of youth than adults (AHA-Mozaffarian 2012). Greater reductions in SSB consumption may lead to more health benefits and larger reductions in obesity rates among low income families (Rudd-Friedman 2012). States can also provide tax credits or rebates to low income households to encourage substitutions, minimizing the regressive income effect of such a tax (Cawley 2015).

A model-based study on net employment in Illinois and California suggests declines in beverage industry employment due to SSB taxes are likely offset by new employment opportunities (Powell 2014).


United States

As of 2014, 34 states and Washington DC have sales taxes on soda sold in food stores. In 20 states, sales taxes on soda are higher than the general state sales tax for food products. In 30 states, sales tax on soda sold through vending machines is higher than the general state sales tax for food products (BTG-Soda or snack).

In March 2015, Berkeley, California implemented a penny per ounce tax on sugar sweetened beverages, the first city-level tax in the nation (Berkeley-SSB tax, NBER-Cawley 2015).


Wisconsin does not have a soda or snack tax (BTG-Soda or snack).

Implementation Resources

AHA-VFHK toolkits - American Heart Association (AHA), Robert Wood Johnson Foundation (RWJF). Voices for healthy kids (VFHK): Toolkits to make the healthy choice the easy choice in the places where children live, learn and play. Accessed on March 1, 2016
CDC-DNPAO data - Centers for Disease Control and Prevention (CDC), Division of Nutrition Physical Activity and Obesity (DNPAO). Nutrition, physical activity and obesity: Data, trends and maps online tool. Accessed on March 1, 2016
ChangeLab-SSB regulation - ChangeLab Solutions. Sugar-sweetened beverage regulation. Accessed on December 1, 2015
Rudd-Resources - UCONN Rudd Center for Food Policy & Obesity. Resources & tools: Publications, reports, databases, and a revenue calculator for sugar-sweetened beverage taxes. Accessed on March 7, 2016

Citations - Evidence

AHA-Mozaffarian 2012 - Mozaffarian D, Afshin A, Benowitz NL, et al. Population approaches to improve diet, physical activity, and smoking habits: a scientific statement from the American Heart Association. Circulation. 2012;126(12):1514–63. Accessed on March 1, 2016
Cawley 2015* - Cawley J. An economy of scales: A selective review of obesity's economic causes, consequences, and solutions. Journal of Health Economics. 2015;43:244-268. Accessed on May 3, 2016
Dharmasena 2012* - Dharmasena S, Capps O Jr. Intended and unintended consequences of a proposed national tax on sugar-sweetened beverages to combat the US obesity program. Health Economics. 2012;21(6):669–94. Accessed on December 10, 2015
Eyles 2012 - Eyles H, Ni Mhurchu C, Nghiem N, Blakely T. Food pricing strategies, population diets, and non-communicable disease: A systematic review of simulation studies. PLoS Medicine. 2012;9(12):e1001353. Accessed on February 4, 2016
Finkelstein 2013* - Finkelstein EA, Zhen C, Bilger M, et al. Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered. Journal of Health Economics. 2013;32(1):219–39. Accessed on February 4, 2016
Fletcher 2010a - Fletcher JM, Frisvold D, Tefft N. Can soft drink taxes reduce population weight? Contemporary Economic Policy. 2010;28(1):23-35. Accessed on February 5, 2016
Fletcher 2010b* - Fletcher JM, Frisvold DE, Tefft N. The effects of soft drink taxes on child and adolescent consumption and weight outcomes. Journal of Public Economics. 2010;94(11-12):967-74. Accessed on February 5, 2016
French 2001* - French SA, Story M, Jeffrey RW. Environmental influences on eating and physical activity. Annual Review of Public Health. 2001;22:309–35. Accessed on February 5, 2016
Kuchler 2005a - Kuchler F, Golan E, Variyan JN, Crutchfield SR. Obesity policy and the law of unintended consequences. Amber Waves. 2005;3(3). Accessed on December 28, 2015
Lin 2011* - Lin BH, Smith TA, Lee JY, Hall KD. Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax. Economics and Human Biology. 2011;9(4):329–41. Accessed on March 3, 2016
NBER-Cawley 2015 - Cawley J, Frisvold D. The incidence of taxes on sugar-sweetened beverages: The case of Berkeley, California. National Bureau of Economic Research (NBER). 2015: Working paper 21465. Accessed on December 17, 2015
NBER-Grogger 2015 - Grogger J. Soda taxes and the prices of sodas and other drinks: Evidence from Mexico. National Bureau of Economic Research (NBER). 2015: Working paper 21197. Accessed on December 17, 2015
Niebylski 2015* - Niebylski ML, Redburn KA, Duhaney T, Campbell NR. Healthy food subsidies and unhealthy food taxation: A systematic review of the evidence. Nutrition. 2015;31:787-795. Accessed on December 17, 2015
Novak 2011* - Novak NL, Brownell KD. Taxation as prevention and as a treatment for obesity: The case of sugar-sweetened beverages. Current Pharmaceutical Design. 2011;17(12):1218–22. Accessed on May 20, 2016
Powell 2009* - Powell LM, Chaloupka FJ. Food prices and obesity: Evidence and policy implications for taxes and subsidies. Millbank Quarterly. 2009;87(1):229-57. Accessed on May 24, 2016
Powell 2013* - Powell LM, Chriqui JF, Khan T, Wada R, Chaloupka FJ. Assessing the potential effectiveness of food and beverage taxes and subsidies for improving public health: A systematic review of prices, demand and body weight outcomes. Obesity Reviews. 2013;14(2):110–28. Accessed on May 20, 2016
Powell 2014* - Powell LM, Wada R, Persky JJ, Chaloupka FJ. Employment impact of sugar-sweetened beverage taxes. American Journal of Public Health. 2014;104(4):672-677. Accessed on December 17, 2015
Rudd-Friedman 2012 - Friedman R, Brownell K. Sugar-sweetened beverage taxes: An updated policy brief. New Haven: Yale Rudd Center for Food Policy & Obesity; 2012. Accessed on March 7, 2016
Sturm 2010 - Sturm R, Powell LM, Chriqui JF, Chaloupka FJ. Soda taxes, soft drink consumption, and children’s body mass index. Health Affairs. 2010;29(5):1052-8. Accessed on May 20, 2016
Todd 2010* - Todd J, Zhen C. Can taxes on calorically sweetened beverages reduce obesity? Choices: The Magazine of Food, Farm and Resource Issues. 2010;25(3). Accessed on May 24, 2016
Urban-Engelhard 2009 - Engelhard C, Garson A, Dorn S. Reducing obesity: Policy strategies from the tobacco wars. Washington, DC: Urban Institute; 2009. Accessed on May 20, 2016
USDA-Smith 2010 - Smith TA, Lin BH, Lee JY. Taxing caloric sweetened beverages: Potential effects on beverage consumption, calorie intake, and obesity. Washington, DC: Economic Research Service (ERS), US Department of Agriculture (USDA); 2010: ERR-100. Accessed on March 15, 2016

Citations - Implementation

Berkeley-SSB tax - City of Berkeley California. Berkeley Municipal Code Chapter 7.72: Sugar-sweetened beverage product distribution tax. Accessed on December 17, 2015
BTG-Soda or snack - Bridging the Gap (BTG). Soda/snack taxes. Accessed on December 1, 2015
NBER-Cawley 2015 - Cawley J, Frisvold D. The incidence of taxes on sugar-sweetened beverages: The case of Berkeley, California. National Bureau of Economic Research (NBER). 2015: Working paper 21465. Accessed on December 17, 2015

Page Last Updated

May 5, 2016

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