Policy ForumHealth Economics

Designing better sugary drink taxes

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Science  06 Sep 2019:
Vol. 365, Issue 6457, pp. 989-990
DOI: 10.1126/science.aav5199

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Summary

Taxes on sugar-sweetened beverages (SSBs), such as soda and bottled iced tea, are an increasingly popular approach to reducing obesity, diabetes, and other health harms (1). As of mid-2019, 42 countries and seven U.S. cities have implemented SSB taxes (2). A basic economic principle is that such corrective taxes should be proportional to the harm caused. The harm from sugary drinks comes from the sugar, and SSBs vary substantially in sugar per unit volume. Yet SSB taxes typically set constant rates per unit volume; only three SSB taxes worldwide are proportional to sugar content. For example, the seven U.S. cities that tax SSBs use volumetric taxes of 34 to 68 cents per liter of liquid (1 to 2 cents per ounce) instead of, say, 0.5 cents per gram of sugar. These volumetric SSB taxes are poorly targeted to the actual health harms from SSBs. We estimate that a simple design change—taxing the amount of sugar in a drink, not the volume of liquid that accompanies the sugar—could boost a SSB tax's health benefits and overall economic gains by roughly 30%.

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