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| 1 minute read

To tax or not to tax ... Data from Oakland, California suggests "sin tax" on sugar sweetened beverages may have worked.

I have been a vocal skeptic of using so-called "sin taxes" to moderate consumer behavior. Tobacco products have historically been the subject of such taxes and the data on whether they in fact moderated or changed consumer behavior was mixed. A few years back, a number of municipalities (most of them in California, surprise!) began adopting taxes on sugar sweetened beverages as a way to ostensibly discourage people from consuming these supposedly unhealthy drinks. My immediate reaction, which I expressed at numerous conferences and in my client alerts, was skepticism that such techniques would change anything. After all, how would a extra couple of cents tacked on to your purchase price cause anyone from buying something they truly enjoy -- like a can of original recipe Coke or Pepsi?

 But it looks like my skepticism may have been misplaced. According to a study from UC San Francisco, since the tax on sugary beverages went into effect in Oakland, California, purchases of these products went down by nearly a third over the time period reviewed. This was true for soda, fruit drinks, sports drinks, and sweetened teas. Anecdotal evidence from other cities who employ similar taxes has also yielded similar results. Now some legislators are suggesting that a similar sin tax on sugar sweetened beverages should be adopted on a national scale.

I confess that I still have my doubts. Like all consumers of information, I intend to take a closer look at the UC San Francisco study to see if other variables may explain -- or at least may have contributed to -- the apparent change in consumer behavior. But if taxes on sugar sweetened beverages did cause  a change in consumer behavior, you can be certain there will more of them implemented down the road.

Residents in Oakland, California have bought fewer sugary beverages since a local soda tax went into effect, says a study from UC San Francisco. The study also found savings in health care costs and compared them to other public health policies.


taxes, sugar, soda, legislation