Does it work?

Who doesn’t love to have a nice, cold soda on warm day? Going to the movies and not getting a soda with your popcorn just doesn’t seem right. However, over the past several years, several cities have passed laws that increase the amount tax that is being charged for sodas and other sweetened beverages. Why is the case? Is it that they just want to make more money? Or, is there something that they are trying to change?


0204 Soda Tax TNThe World Health Organization (WHO) has recommended that globally we need to reduce our intake of sugar because there is too much added sugar in our diets. Added sugars means that it doesn’t occur naturally in foods. According to the Center for Disease Control (CDC), sodas are the main source of added sugar in the American diet. Other sources include beverages like fruit drinks (that have less than 50% fruit or vegetable juice content), sports drinks and energy drinks. All of these have very little or no healthy ingredients in them. Recent studies have found that there is strong scientific evidence these beverages are linked to weight gain that results in the development of obesity, heart disease, type 2 diabetes, liver diseases, tooth decay and other chronic diseases. The weight gain occurs because drinking the high-calorie beverages does not make you feel full, so you have to drink more and eat more food to get this feeling. For example, if you drink a 20-ounce soda, it’s as if you’ve eaten 22 packets of sugar, but it doesn’t provide you with the since that you’ve consumed anything. When looking at it in this light, it’s easy to see how you end up eating more calories than you intend. Not only is it more calories, but empty calories because they provide no nutritional value. Over the long term, all those extra calories add up.

What we know for sure is that obesity costs a lot. It’s estimated to cause $147 billion in medical costs in the United States yearly. Unfortunately, that number is expected to rise dramatically as this generation of youth who have record levels of obesity reach adulthood. The increased healthcare cost is an obvious way that obesity impacts our society. Less obvious ways are things like decreased fuel efficiency because cars are transporting heavier people. Those most effected by obesity and the complications that arise from it are those who are poor. This is because soda and sweetened beverages can be sold cheaply. However, these individuals can least afford the healthcare that is required to treat the diseases that are the direct result of their sweetened beverage consumption.

In order to combat the volume of sugary beverages that people are consuming, more than 30 countries and seven United States cities now tax sweetened beverages. Some people refer to them as a soda tax, but it doesn’t apply just to soda. The rules varying as to what exactly constitutes a sweetened drink. It doesn’t have to contain just sugar. Some areas include drinks made with artificial sweeteners. Typically, it would apply to any beverage that has added caloric sweeteners in it, like soda, sports drinks, energy drinks, flavored waters, fruit drinks and sweetened teas. Caloric sweeteners include sugar, high fructose corn syrup and fruit concentrates. Beverages that aren’t include in the tax are diet drinks, infant formula, nutritional supplements or drinks with milk in them. Also, even though some alcoholic beverages contain sugar they are not include either because they’re already taxed separately.

Just how much of a tax are we talking about? The National Institute of Health (NIH) believes a 10% tax increase on soda would lead to an 8% decrease in consumption. Some economists feel that if the price of a sugary drink goes up 10%, consumption of it will actually go down by about 10-12%. Most of the taxes range from 1 to 2 cents per ounce. So, a tax of a 1 cent per ounce, would actually raise the cost of the average sugary drink by about 15-20%. Numerous experts in healthcare, public health and economics are confident that a tax of this amount will reduce consumption and help to lower obesity and overweight rates in the US. As with anything, if the price of something increases, but it’s considered a necessity, people will buy it anyway. If the price goes up on something that isn’t considered a necessity, people will buy less of it.

How does the tax work? The good news is that you wouldn’t have to pay the tax directly. Currently, 34 states and Washington, DC already have sales taxes on sugary drinks. This isn’t what is being proposed by legislators. Instead, it’s an excise tax. An excise taxes targets the manufacturers or distributors of the drinks. They pass on that cost on to retailers who in turn hike the prices paid by consumers. Another option is taxing sugar, high-fructose corn syrup, fruit juice concentrate and other added sugars at the point where they’re manufactured or imported. It’s important to note that imported sugar is already taxed. Essentially, we would be taxing everything with added sugar and it would be proportionate to the product’s sugar content. This is called an input tax. Many health officials feel this would be a better way because it gives us two shots at gaining health benefits. In addition to the increased cost to consumers in hopes of improving their habits, food manufacturers would want to reformulate their products so that they have less of the taxed ingredient, in this case sugar, in it. Ultimately, product reformulation is the better public health bet. Since it’ll take awhile for the implementation and acceptance of an input tax, many cities around the US are focusing on the excise tax because it provides a more immediate result.

The revenues that are the result of these taxes are significant. Philadelphia implemented a sweetened beverage tax and during the first two months after it went into effect, it raised $12.3 million. Cook County, Illinois, which includes the city of Chicago, raised $40 million in the first six months of their tax. (Unfortunately, Cook County’s tax has been repealed due to pressure from beverage companies.) What are the cities doing with all this extra money? Many have earmarked the revenue to be spent on obesity prevention programs, children’s health programs and nutrition education programs. Others focus on building and maintaining new state parks, or improving existing ones to create more places where people can exercise. Also, people on the food stamp plan, Supplemental Nutrition Assistance Program (SNAP), are being further assisted so they can buy more fresh fruits and vegetables. By taxing unhealthy habits, we are promoting positive public health benefits and can utilize the revenue to fund community programs that can have significant impact on public health as well.

A great example of how a sweetened beverage tax might work here in the US can be seen by looking directly to our south. In 2013, Mexico’s congress passed a one-peso-per-liter tax on sugary beverages that went into effect all over the country. This raised their prices by 10%. They also passed an 8% sales tax on junk foods including chips, cookies, candy, and ice cream. Both went into effect in January 2014. The reason that this is important it because Mexicans drink about 43 gallons per capita per year of sugary beverages. Americans drink about 31 gallons or about 40% less than Mexicans. Also, about 71% of Mexican adults are overweight and 32% are obese. In the US, about 70% of adults are overweight and 36% are obese. The rate of diabetes in the two countries are very similar, somewhere between 11 and 12% of the adult population. By taking a closer look at how the health of Mexicans change under the new laws, we can get a better idea of how implementing such laws in the US would impact our obesity problem.

During the first year of Mexico’s soda tax, purchases of sweetened beverages decreased by about 6%. This is an impressive number since the tax is relatively small. Many economists feel that a 10% tax is right at the beginning of where you start to get changes in people’s behavior. The main thing that is interesting about Mexico’s tax is that it’s a national one. So, individuals can’t avoid it. The issue with local taxes applied at the city or county level, like Philadelphia or Cook County, Illinois, is that people can simply drive to somewhere else to buy their beverages for less money. Local businesses claim that this is a financial concern because consumers don’t just buy sweetened beverages elsewhere, but purchase other groceries and gas up their cars at the same time. Another benefit of Mexico’s tax is that it affects people in all different kinds of communities, from the poor in remote, rural areas to the richest of the rich in the cities. Even with this widespread impact, it will have a higher influence in lower income communities because they’re the ones who can least afford a price increase. So, the poorest people will be the ones who cut back the most. Since this group is usually the ones who are more impacted by obesity and would be responding more strongly to the tax, they are likely to benefit most from reduced healthcare costs. Mexico’s tax is raising about $150,000 per month that they are giving to community initiatives to improve the health of the individuals within that community. During the initial year of the tax, it is important to note that Mexico experienced an increase in unemployment, but also had an increase in marketing strategies from beverage manufacturers. Overall, soda consumption went down 12% in the first year. This brings the question of what are they drinking instead of soda? During the same time period of when the tax was first put into place, there was 4% increase in purchases of bottled water. This is the best possible outcome from a public health perspective. Due to this increase in bottled water purchases, some Mexican government officials are lobbying to remove sales tax from bottled water because it can be almost as expensive as soda. They feel that if bottled water weren’t subject to sales tax, it would be cheaper and that would continue lure people away from buying soda.

The opposition has not accepted the idea and implementation of soda taxes quietly. The main opponent is the American Beverage Association (ABA). They believe that the positive health benefits related to less consumption of sweetened beverages are false and that a decline in soda consumption wouldn’t result in a decline in obesity. By doing this, they are trying to cast doubt on the longer-term health impact of reducing soda consumption via taxing soda. In order to assist their cause, they put out false reports similar to what the tobacco industry did when smoking was first being claimed as a public health problem. Similar to the tobacco companies, the soda industry has poured millions of dollars into fighting taxes on sweetened beverages. Besides successfully campaigning against these types of taxes in dozens of cities across the country, they also have filed numerous lawsuits to attack current laws or prevent new ones from being put in place. Several soda companies funded ballot measures in Washington and Oregon that don’t allow for sweetened beverage taxes. Coca-Cola contributed nearly half the $20 million raised in support of the one in Washington and the ABA underwrote about half of the $5.6 million behind the one in Oregon. To put in it some perspective, the entire food and beverage industry spends $22.4 million a year on lobbying. The scary thing is that’s more than the tobacco industry spends at $16.7 million. In the state of California, there are several cities that have a sweetened beverage tax. These are being put in place to combat the huge diabetes and obesity epidemic California is facing. It’s estimated that nearly 2.5 million Californians, or almost 1 out of 10 people, live with diabetes and another 13 million residents have pre-diabetes. Despite this, California spends less than any other state on prevention. However, the ABA became concerned about all of these local taxes and convinced California state lawmakers to bar future local taxes on sweetened beverages. This means that no new food or beverage taxes can be passed in the state until 2031. The reason behind the statewide ban is because that the ABA feels it more efficiently protect jobs and businesses that could be hurt by local tax laws. They feel that stores in cities that passed soda taxes face sharp sales declines, which is risking jobs. Also, they feel that the taxes disproportionately affect low-income shoppers, who spend larger portions of their income on food and beverages. As we saw in the Mexico, this is true. However, we also saw that they individuals are the ones most affected by obesity and related health problems.

The influence of the ABA isn’t limited to only Washington, Oregon and California. A study done in 2016 found that Coca-Cola and PepsiCo funded 95 national medical organizations between 2011 and 2015. During this time, they also lobbied against 29 public health bills that aimed to reduce soda consumption and improve diet. From 2008 to 2016, Coca-Cola funded the publication of 389 articles in 169 journals. Not surprisingly, all of this industry-funded research tends to remit soda from any role in causing obesity. According to this research, the reason our society has an obesity problem is due to inactivity. They suggest exercise is far more important to losing weight than cutting back on sugar and calories. Most scientific data says that you need to have both, exercise and a healthy diet, in order to maintain a healthy weight because exercise alone isn’t enough. Yet Coca-Cola, PepsiCo and other beverage companies have tried to shift the blame away from themselves by influencing policymakers and lawmakers, misleading marketing campaigns and philanthropy. Part of this willingness to try and influence policymakers is evident by the fact that Coca-Cola employees sent emails to top CDC officials between 2011 and 2015 to try to encourage the agency to push aside the WHO’s recommendations and stress that exercise is more important than diet when it comes to solving the obesity epidemic. In addition to the CDC, the beverage industry has tried to influence other health groups. The Obesity Society represents doctors who treat overweight patients. They have stated that there’s no proof that imposing sweetened beverage taxes will save lives. The Academy of Nutrition and Dietetics includes dietitians and has chosen to taken a neutral stance on sweetened beverage taxes. Both of these groups have close relationships with the beverage industry, which puts their position squarely on that side of the argument and against public health. Failing to tell the whole story about what really causes weight gain and all the related conditions carries huge consequences.

The issue of sweetened beverages and how much they contribute to obesity has definitely made the national spotlight and have certainly made people more aware of how big of an issue it is. These tax laws are a reflection of recent research and this shift in public opinion. The changes can have a positive impact. For instance, when Philadelphia was considering its tax, Harvard researchers ran a study that found the tax could help 36,000 people per year avoid obesity, prevent 2,280 annual cases of diabetes, avert 730 deaths over a decade and save almost $200 million in healthcare spending. Using computer simulation, the researchers found that Mexico’s tax will lead to a profound decrease in obesity-related disease with significant cost savings. This change in mindset suggest that voters respond to the idea of improved health and politicians appreciate having more money to spend. The key is to make sure that this increase in revenue is being used address healthcare costs at the state and local levels.

Recently, in response to the ABA’s legislation that passed in California, a proposed ballot measure backed by California doctors to have a state tax for sweetened beverages was given the go ahead by state officials to start collecting signatures to qualify for the 2020 ballot. The measure wants to use the taxes to fight childhood obesity and dental disease and change the state constitution that banned new local taxes on soda until 2031. If passed, it’s estimated to raise $2 billion to $3 billion by 2022-23, which would be allocated to pay for public health programs. The proposed initiative is to create a new two-cent-per-ounce excise tax on sweetened beverages, not including diet sodas, milk, juice, infant formula and medical beverages. The bulk of the revenue would go toward prevention and treatment programs for medical and dental diseases linked to sweetened beverages. Smaller portions would pay for improving access to fresh fruits and vegetables and research on diseases linked to sweetened beverages. In order to qualify to be on the 2020 ballot, proponents have to get the required about of signatures by early March.

We know that the national obesity rate more than doubled among adults and tripled among children in the time from 1980 to 2010 and is higher in low-income communities. Unfortunately, education alone isn’t enough to change our habit of drinking sweetened beverages to help change the problem. The simple idea of raising the prices of these types of beverages and people will buy and drink fewer of them, which will reduce their caloric intake resulting in weight loss is the best approach. The other key is to use the revenue from the tax to pay for obesity prevention programs. The reason that we know this will work is because it worked with cigarettes. As the price of cigarettes increased, the number of people who smoke has gone down. Some people are concerned that tobacco and sweetened beverages are two different things because sweetened beverages are considered food and most people don’t like being told what they can and can’t eat. However, any success in major public health issues, such as widespread vaccination, reduced cigarette smoking, motor vehicle safety and control of communicable diseases, have all come from legislation that holds people accountable by making them pay a penalty for engaging in the unhealthy behavior and launching public awareness campaigns to get the knowledge out to the people. In the past, Congress led the charge in regulating the tobacco industry. Unfortunately, there have been no hearings on how cheap products from the sugar and beverage industries are affecting the health of Americans. We need to make changes and have widespread sweetened beverage taxes. Once the legislation is in place, there’ll be plenty of support to help raise awareness because many health groups, like the American Heart Association, American Cancer Society and American Diabetes Association, support the tax.

A sweetened beverage tax alone is not going to fix the entire obesity and diabetes epidemic. It’s only one tool that’s definitely need, but it truly can make a difference. The ultimate goal isn’t to charge people extra money just for the sake of charging money, but to shift people’s mindset about these types of beverages because we all play a role in our own health. It’s the government’s job to set forth guidelines that are appropriate and hold large companies responsible to ensure they follow these guidelines. It’s our job to be aware of things that adversely affect our health and do everything that we can to avoid engaging in those behaviors. We’re not innocent in this process and should be doing everything we can to fix it!