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Soda Survey Says Taxes Need to be Big

Kelly Phillips ErbApril 5, 2010

A study out of the Rand Corporation has concluded that “small taxes” on soda do little to reduce soft drink consumption or prevent childhood obesity. Economist Roland Sturm and his teams analyzed how more than 7,300 fifth graders ate, drank and moved. The children were asked, as part of the study, how many sodas and sports drinks they drank during the week.

The findings of the study were analyzed in the context of state and local taxes. The average tax on a dollar’s worth of soda was 4 cents and the highest tax was 7 cents. Forty states were represented in the study; approximately 2/3 of the fifth graders lived in states where the tax on the soda was higher than other foods and beverages.

What the research, which has been published online in Health Affairs, found was that most kids did not change their soda or sports drinks habits based on taxes. The one exception was for kids from families with an annual income of $25,000 or less: those kids drank one less can of soda per week because of the tax. Sadly, that still brought the total to seven cans of soda per week.

The conclusion of the study? “Small taxes will not prevent obesity,” said Sturm.

The same study, however, found that larger taxes might. Sturm said that the research indicated that taxes of about 18 cents per dollar would affect behavior.

Does that mean that Philly had it right? Under Mayor Nutter’s proposal, a can of soda would see a 24 cent tax increase and an individual bottle of soda would see a 32 cent tax increase.

Hmm. Just saying.

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Kelly Phillips Erb
Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.
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3 thoughts on “Soda Survey Says Taxes Need to be Big”

  1. shannon says:
    April 6, 2010 at 12:50 pm

    Just thinking. Does the unintended consequence mean that only the “rich” will be able to afford soda? Taxes that divide the people? Instead of over-taxing how about over-educating?

    Reply
  2. jody frasnelli says:
    April 7, 2010 at 3:09 pm

    first of all i agree obesity is out of control . the basic idea of taxing should be less focused on beer and soda and a higher tax should be directed at fast food resturaunts. kids meals by themselves are fine for kids but when a parent gets their child three happy meals at a time that is where the obesity is coming into play. i have seen in several states parents are to blame not the beverage companies and fast food but the parents themselves are to blame tax the parents who by excessive amounts of fast food. i hope this reaches someone who can make a change in the parents

    Reply
  3. Paul says:
    April 13, 2010 at 1:45 am

    I personally think this is completely ridiculous. The tax obviously exists to raise revenue, and given that it costs the taxpayer some indeterminate amount in the form of public services, you have an *almost* convincing ethical argument in favor of this tax. Nevermind that it’s regressive and is putting down an industry that the government corn subsidy is partly propping up; it’s *for the children*!

    It’s not going to impact obesity at any price. Of you tax soda out of reach, candies made almost entirely of sugar are still available. If you tax those out of reach, the starches still work almost as well. If you tax those out of reach, gee, I dunno; but by then it’ll time to do some income redistribution through an existing mechanism like the EIC and “Make it easier for parents to provide for their kids.”

    Oof.

    Sorry about the rant. Tax policy is a part of politics that can really frustrate me.

    Reply

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