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Soda Tax for Obesity Prevention – has the time arrived? March 4, 2010

Posted by Sara Imershein MD in Healthcare, Prevention, Wellness.
A federal excise “soda tax” of one-cent per ounce for sugary beverages has been proposed to lower soda consumption and associated obesity. A secondary benefit would be raising tax revenue to subsidize health care reform for low income Americans, and healthy food options for the poor through the Supplemental Nutrition Assistance Program (SNAP). Obesity and overweight are substantial American problems decreasing productivity and increasing the incidence of many medical problems, most noteworthy type 2 diabetes, cardiac disease, and pre-mature death. According to the Robert Wood Johnson Foundation obesity and its medical consequences have cost the American people $100-200 Billion dollars in excess health care costs.
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The twentieth century has seen remarkable progress in medicine and public health resulting in greater longevity for Americans. This trend for longer life has reversed and obesity and overweight are the primary cause. A direct relationship between drinking sugar-sweetened beverages (SSB) and weight gain has been established in numerous, rigorous, scientific trials and studies.   Deleterious effects of sugary beverages include glucose intolerance and hyperlipidemia contributing to the incidence of obesity, diabetes, and cardiovascular disease. Children who drink SSB are statistically at greater risk for overweight and obesity in childhood, adolescence, and adulthood.  SSB contribute to obesity by adding empty dietary calories with less satiation augmenting rather than replacing other calorie sources. The lack of nutritional value and strong causal association with weight gain, overweight, and obesity make SSB a target for effective policy to reduce consumption of these beverages. Consumers at risk for obesity – the poor, the young, the overweight, and ethnic minorities are most sensitive to price and would maximally benefit from the policy implications.  Taxing non-essentials has been proven to change purchasing behavior. Substantial taxation of tobacco was the most significant policy responsible for the fifty percent reduction of tobacco use over past two decades. The best solution to the obesity problem in America may be a federal tax on sugar sweetened soft beverages, sometimes referred to as a ‘soda tax.’
Drastic measures are needed to drastically reduce the prevalence of obesity and its impact on human health and national medical expenses. Policy makers can benefit from studying the policy decisions that resulted in a marked reduction in U.S. tobacco use over the last 40 years. According to the Urban Institute, the establishment of a substantial tobacco excise tax was the single most effective policy to reduce consumption supplemented by anti-tobacco programming. Data from the anti-tobacco model and numerous supportive studies suggest a one-cent per ounce excise tax is an appropriate and effective way to reduce excess calorie consumption and resulting obesity. Using targeted taxes or subsidies to alter consumption is based on well-established economic theory of price elasticity. A federal soda tax could be imposed as a sales tax, calculated a percent of the price so it would rise with inflation. The excise tax would be based on the volume of caloric sweetener added or volume of sugary beverage sold. A one-cent-per-ounce tax has been estimated to reduce consumption by 8 to 11.5 percent and lower total caloric intake.
Opposition may be anticipated from industries that profit from sugary beverage sales ranging from major beverage companies, grocery and convenience stores, to agribusiness, including corn farmers. However, according to the National Corn Growers Association corn cultivated for high fructose corn sweetener (HFCS) is less than four percent of the national harvest and decreasing while corn’s use for ethanol is increasing. HFCS has reduced the price of sweetened foods and beverages; the rise of its commercial use has correlated with the increase in American obesity. Large beverage companies will likely see a decrease in sales of popular brands but will certainly be motivated to create new non-caloric alternatives and maintain profits, sustaining the packaging, transportation, wholesale and retail businesses who deliver the products to consumers. Similarly the advertising industry will have new products to promote and support their markets.
What are our options?
We need an effective policy to reduce overweight and obesity, and improve health. The policy should target individuals at highest risk, benefit the poor and minorities, and hopefully offset taxpayer expenses for obesity while remaining budget neutral.
Consider the following choices –
  1. Continue encouraging exercise and awareness of good nutrition choosing to do no more because personal consumption is a personal responsibility issue.
  2. Support new, non-tax initiatives including restrictions on food advertising, extensive food labeling, removal of SSB from schools, strict school meal program guidelines for healthy foods, school educational programs on nutrition and exercise, improving the built environment to increase exercise, and other non-tax programs.
  3. Support the a one-cent-per-ounce federal excise tax on SSB because the government has a responsibility to improve public health of the population and because a user tax targets and benefits the population most at risk
The status quo has not slowed the rise in obesity and overweight in America. We cannot sustain the increase in medical costs nor tolerate the increase in morbidity and mortality. Considering their limited resources low income and minority Americans are disproportionately impacted by the easy availability of cheap but unhealthy high calorie food for their families. Reduction of SSB alone will not improve nutrition unless healthy alternatives are economically available. Farmers markets and fresh produce are more expensive. Learning about healthy food does not make healthy food available.
Studies have shown consumption taxes are effective. A tax on sugary beverages would reduce consumption, average daily calories, overweight and obesity, and be more effective in those who consume more SSB. Earmarking revenue to help finance health care reform will add to the tax’s popularity with taxpayers. SNAP subsidies would effectively lower the price of healthier alternatives, including milk. New programming would be costly, and likely ineffective without financial incentives to reduce consumption. American business is creative and adaptable. Markets will adjust, innovated businesses will thrive, and all Americans could benefit from the improvement in population health if a substantial SSB tax became law and revenues were targeted to offset disparities, health reform expense, and improve America’s health. The public is increasingly supportive of a tax designed to target the identified public health problem of obesity and specifically benefit children and the underserved.
We should institute a soda tax.
Summary of Reasons to Support a one-cent-per-ounce SSB Tax estimated to reduce consumption by 8 to 11.5 percent, lower total caloric intake, induce weight loss, and raise approximately $15 Billion per annum:
  • Obesity and overweight are a national and global epidemic.
  • More than one third of adult Americans are obese and half as many children, twice 1980.
  • Overweight and obesity contribute to the incidence of premature death and the prevalence of numerous chronic diseases, most notably coronary artery disease and Type 2 diabetes
  • Nationally, medical costs are approximately $100-$200 billion per year higher due to overweight and obesity.
  • Recipients of Medicare and Medicaid incur 50% of the cost of obesity-related disease.
  • Medical care for obese workers significantly increases average health insurance premiums for non-obese co-workers.
  • The impact of American obesity and overweight has overwhelmed the medical system and reversed a century of increasing longevity.
  • Inexpensive sugar sweetened beverages (SSB) contribute overweight and obesity. Numerous, rigorous scientific trials and studies have confirmed the evidence.
  • SSB add an average of 300 calories to the daily diets of adolescents leading to overweight and obesity, glucose intolerance, hormone abnormalities, and numerous chronic medical problems, increasing risk for premature death.
  • Youth (2-18 years) drink more sugar-sweetened beverages than milk.
  • SSB contribute to obesity by adding empty calories, not replacing other calorie sources.
  • The lack of nutritional value and strong causal association with weight gain, overweight, and obesity make SSB a target for effective policy to reduce consumption of SSB.
  • Taxing non-essentials has been proven to change purchasing behavior.
  • Hefty tobacco taxes are responsible for a 50% reduction of tobacco use.
  • The proposed one-cent per ounce tax will reduce consumption by 8 to 11.5 percent, lower total caloric intake, induce weight loss, and raise $15 Billion yearly.
  • A flat beverage excise tax may be considered regressive but any disparity created would be offset by the benefits to the low income and minority populations – reinvested in health insurance and healthy food subsidies for low income Americans AND reinvested in obesity prevention programming.
  • Excise taxes effectively impact purchase decisions in the grocery aisle.
  • Current state junk food taxes: currently too low to impact consumption tax revenue not committed to reduce obesity or offset disparities.
  • Opposition may be anticipated from industry, however the National Corn Growers Association’s website states, but more than 4% of corn harvest is used for High Fructose Corn Syrup (HFCS). HFCS use is decreasing, while its use for ethanol is increasing!
  • Science confirms inexpensive HFCS contributes to obesity.
  • Opposition research is biased and industry sponsored.
  • Beverage Industry will shift sales and marketing to healthful alternatives.
  • The public is increasingly supportive of a tax designed to target the identified public health problem of obesity and specifically benefit low-income families and children.
  • Taxing Sugary Beverages is an effective, fair, and appropriate use of legislation to reduce overweight and obesity’s monetary and societal costs, and Improve America’s Health.


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