Expert Commentary

Taxing sugar instead of soda prompts healthier food purchases

A new study suggests taxing sugar instead of soda is a more effective way to help people cut calories.


A new study suggests taxing sugar instead of soda is a more effective way to help people cut calories.

The issue: In the midst of a nationwide obesity epidemic, several cities and counties have begun levying a new tax on soda and other sugar-sweetened drinks. In early 2017, for example, Philadelphia introduced a 1.5-cents-per-ounce “soda tax” to encourage residents to make healthier beverage choices and raise money for local preschools. In August 2017, shoppers in Cook County, Illinois, started paying a penny-per-ounce tax on sweetened drinks. Many other communities are debating the issue.

But does taxing soda really discourage consumption? A new study looks at whether taxing sugar, fat or salt might be a more effective way to get people to cut back on unhealthy foods than taxing specific products.

A study worth reading: “The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes,” published in the Journal of Health Economics, 2017.

Study summary: Matthew Harding of University of California-Irvine and Michael Lovenheim of Cornell University examine how price increases affect food-buying habits and personal nutrition. The authors simulate a 20 percent tax on products such as soda, sugar-sweetened beverages, packaged meals and candy and snacks. For comparison, they also simulate a 20 percent tax on foods and drinks containing salt, fat or sugar.

As part of the study, Harding and Lovenheim analyze more than 123 million food-purchase transactions from a variety of stores in 52 geographic markets between 2002 and 2007. They rely primarily on records from the Nielsen Homescan Panel, which collects details on grocery purchases made by a representative set of consumers.

Key takeaways:

  • Higher-income households buy more fruits, vegetables, snacks, candy and packaged meals while lower-income households buy more soda, meat and milk.
  • Taxing sugar, fat and salt has a larger impact on consumer nutrition than product-specific taxes. For example, a 20 percent tax on soda reduces sugar consumption by 10.35 percent but only cuts overall caloric intake by 4.84 percent. A 20 percent tax on sugar cuts sugar consumption by 16.41 percent and reduces caloric intake by 18.54 percent.
  • Taxes on snacks and packaged meals have little impact on nutrition.
  • Taxes on fat result in a 19 percent reduction of total calories consumed. A 20 percent tax on salt decreases calories 11 percent.
  • Sugar taxes are especially effective at encouraging healthier purchases. “Sugar in particular is highly prevalent in American foods. Taxing these nutrients does not allow consumers to substitute to other goods that also contain these nutrients. Rather, they shift to healthier products and decrease overall consumption.”

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