Do Sugary Drink Taxes Change Behavior?

This transcript has been edited for clarity.

Today I'm going to talk about sugary drink taxes and the potential for these taxes to improve health outcomes. An unhealthy diet is a major cause of early death in the US, accounting for 1 in 5 deaths in this country. One dietary area that we've focused on as researchers and policymakers over the last decade or so is sugary drink consumption.

On any given day, more than half of adults and children consume sugary drinks. Research tells us that overconsumption of these drinks contributes to some of the most important health problems in this country, including obesity, heart disease, and type 2 diabetes. This is why it's no surprise that policymakers have sought policy solutions to address consumption of sugary drinks. One policy that's become increasingly popular in recent years is sugary drink taxes.

Today, more than 50 countries have sugary drink taxes. Here in the US, seven different cities have these taxes. I'm going to focus today on the tax that Philadelphia has implemented. Philadelphia is the largest US city with a beverage tax and the sixth largest city overall. It's important for us to understand the effects of the beverage tax in this environment. Philadelphia implemented its beverage tax in January 2017. Their tax applies to both sugar- and non–calorically sweetened beverages — that is, to both regular and diet drinks.

Our next important question is, how do consumers respond to these price increases? How much do we change our behavior as the price of these sugary drinks increases? A number of studies have examined this question. The largest of these studies examined sales of beverages in Philadelphia and compared those sales with sales in other cities without beverage taxes.

These studies found that the implementation of the Philadelphia beverage tax resulted in a reduction in sales of taxed beverages in Philadelphia from 22% to as high as 38%, depending on the study. This is a substantial reduction in sales of these beverages, much larger than we see from interventions like educational campaigns, so it's substantial.

You might be wondering: If consumers buy fewer sweetened beverages after the tax, what do they buy instead, if anything? A handful of studies have examined this. Those studies found that consumers are not substituting sweet foods like cookies or other desserts for these sweetened drinks. They're also not substantially increasing their purchases of nontaxed beverages like milk, 100% juice, and water.

We are seeing some increases in purchases of beverage concentrates. These are powders and syrups that consumers make into beverages at home. That suggests that policymakers might want to consider whether these beverage concentrates could be taxed in the future because we don't necessarily want to encourage consumers to buy those products.

You might wonder where the revenue from the beverage tax is allocated. In the most recent fiscal year, 2020 to 2021, the beverage tax raised about $77 million in revenue. As part of the campaign to pass the beverage tax, the city committed to allocating a large portion of that revenue toward funding universal pre-K. This increased the popularity and the policy support for the tax that we see in the city.

In fact, a large share of the revenue has been allocated to early childhood development. About $51 million in fiscal year 2021 was put toward early childhood development and specifically toward funding universal pre-K in the city.

Other allocations included significant funding for community infrastructure projects like improving parks and recreation centers, economic development programs like job training and GED classes, and about $2 million to increase access to healthy foods — for example, through the Meals on Wheels program and to food banks.

There are still several questions that researchers have about the long-term impacts of beverage taxes in Philadelphia and in the US and across the globe. The evidence to date indicates that these beverage taxes lead to significant reductions in purchases and consumption of sweetened drinks, and we think that would be likely to improve health outcomes.

Moreover, these taxes raise significant revenue that the government can use to fund important health and social programs in ways that could benefit our health over a longer time horizon. In that way, beverage taxes represent a win-win of a policy. They are improving the health of consumers and generating much-needed revenue to fund important programs.

For more diabetes and endocrinology news, follow us on Twitter and Facebook

Follow Medscape on Facebook, Twitter, Instagram, and YouTube

Medscape Diabetes © 2022 WebMD, LLC

Any views expressed above are the author's own and do not necessarily reflect the views of WebMD or Medscape.

Cite this: Anna H. Grummon, Mark Harmel. Do Sugary Drink Taxes Change Behavior? - Medscape - Jul 27, 2022.