A number of cities last month passed excise taxes on sugar-sweetened beverages as a way to discourage their consumption.
Public health advocates were encouraged by the moves, saying the efforts have been proven to make people think twice before they reach for that Big Gulp, which too often contributes to skyrocketing obesity rates.
But a report out this week says there's a better way to make people drop their sugary drinks and their pants' size: hit soda companies in their pocketbooks by taxing the sugar the beverages they make contains.
“A tax that targets sugar could, in principle, get both consumers and manufacturers thinking about consuming less sugar,” said Donald Marron, a fellow and director of economic policy initiatives at the Urban Institute. “Volume-based taxes basically just focus on consumers consuming less.”
Marron co-authored the new report which analyzed the potential costs and benefits of employing taxes on the amount of sugar within a beverage rather than on the number of ounces in each container.
In a statement reacting to the findings of the report, Nancy Brown, the CEO of the American Heart Association, said implementing a tax based on sugar content could reduce consumption by as much as 25% compared to an estimated decline of 22% from a volume-based tax.
The World Health Organization supports making sugary drinks more expensive, saying that increasing their prices by 20% to 50% could significantly reduce consumption.
Soda taxes have passed in a total of seven cities in the U.S. and one county including San Francisco, Philadelphia, and Boulder and Cook County which includes Chicago. The cities levy a 1 to 2 per ounce excise tax on all sugar-sweetened beverages.
But it's not just the health benefits that could make the move more popular. The municipal revenue benefits that come with tax hikes could encourage other governments to sign up for their own local ordinances.
Cook County Board President Toni Preckwinkle released a statement explaining the rationale.
“This sweetened beverage tax provides important revenue that will allow us to avoid damaging cuts in the funding for public health and public safety,” Preckwinkle wrote. “As importantly, this tax can play a positive role in important health issues that impact many of our residents – such as obesity, diabetes and heart disease – and lessen the financial burden on our health and hospitals system.”
The Center for Science in the Public Interest estimates that Philadelphia alone will see more than $90 million through the extra soda tax revenue each year.
Some hope the increased popularity of the taxes could lead to a federal tax, though some lawmakers oppose the regulations, saying they create a "nanny state" that restricts individual choice.
Marron said a federal tax would be harder for soda companies to skirt.
