Soda Tax: Drink Pop, Pay More
There could be a $7 billion benefit when a soda tax is levied, unless a no-tax town is next door.
Love sodas or loathe them, it’s becoming harder to ignore the impact that a “soda tax” can have on consumption rates. A tax of 1.5 cents per ounce of sugary drinks sold in Philadelphia, implemented in 2017, resulted in a 51% drop in sales compared with the previous year, although that figure was partially offset by a rise in sales in neighboring no-tax towns, according to research published in JAMA.
In a major review of previous studies, researchers from New Zealand’s University of Otago found strong evidence that soda taxes implemented in a handful of U.S. cities and the countries of Chile, France and Mexico have indeed cut the purchase and consumption of sugar-laced drinks.
A group of economists from various academic institutions, including New York University, crunched the numbers and estimated that soda taxes across the United States would yield $7 billion in net benefits each year to both low- and high-income members of society. Benefits included extra social services that could be provided via more tax revenue and fewer medical bills. For instance, the funds generated by the tax in Philadelphia have been earmarked to lessen the burden of poverty through better education opportunities, job training and youth program initiatives.