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Does Taxing Soda Actually Improve Americans’ Health?

February 24, 2014
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Does Taxing Soda Actually Improve Americans’ Health?
Maybe not, a new study suggests, but taxing sugar could.

Obesity in America is an expensive problem—one analysis calculated the costs of obesity-related medical expenses at $147 billion in 2008. For years politicians have debated whether a tax on unhealthy items would help to turn the obesity rates around, and some cities have gone forward with proposing taxes on soda, including San Francisco, which will ask voters to decide on a soda tax on the November ballot.

But a new study from the National Bureau of Economic Research suggests that taxing any one food product often results in consumers switching to an equally unhealthy item. The report, entitled “The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes,” suggests that the better way to go would be to tax the precise ingredients that are detrimental to health—sugar, salt, and fat—as increases in these taxes do result in lowering the overall consumption of junk food.

The study, which analyzed 123 million food purchases, found that a 20% tax on sugar would result in a 16.41% drop in sugar consumption, while a 20% tax on soda would reduce soda purchases by about 4%, but might send soda lovers scurrying to other unhealthy options. The study’s authors conclude, “nutrient-specific taxes on sugar, fat or salt have much larger effects on nutrition than product-specific taxes on soda drinks or packaged food.”

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