Illinois recently became the latest state to consider a special tax on soft drinks. The logic behind such legislation is sound, as much research has linked our increased consumption of sugary beverages to the obesity rate. But does raising their price really cut consumption?
Newly published research from the Netherlands suggests the answer is yes. What’s more, the tax doesn’t have to be huge in order to be effective.
It found that a tax increase from the standard six percent to 19 percent “was effective in decreasing sugar-sweetened beverage purchases, and had no significant effects on other beverage categories or snack foods.” In other words, there was no evidence shoppers simply satisfied their craving for sweets by buying other, equally problematic substitutes.
“It has been argued that alcohol consumption might increase as a consequence of a sugar-sweetened beverage tax. We included alcoholic drinks in our analysis, and did not observe any significant changes.”
The study, published in the journal Appetite, was conducted by a trio of researchers led by Wilma Elzeline Waterlander of VU University Amsterdam. It featured 91 participants (three-quarters of whom were women), recruited from the students and staff of the university.
After being presented with a shopping budget appropriate to the size of their household, each participant entered a three-dimensional virtual supermarket designed to closely replicate the actual experience of shopping for food. They navigated a cart down various aisles and selected products with a mouse click.
For half the participants, product prices were normal for the Netherlands, including a six percent value-added tax. For the other half, the tax was increased to 19 percent for “all sugar-containing beverages, including soft drinks, fruit juice, flavored milk, and energy drinks,” the researchers write. (Alcohol is already taxed at 19 percent in that country.)
After each had “checked out,” researchers tallied their purchases, focusing specifically on drinks and snack-food items such as desserts, chips, and candy. They found that those faced with the higher tax rates bought fewer sugary drinks—an average of just under one liter per household per week.
“While this reduction is relatively modest,” the researchers write, “it could have substantial cumulative effects in the long term,” and make a big difference in nationwide obesity rates.
“Our study observed no change in purchases in other beverage categories as a consequence of the tax, except for an increase in coffee and tea purchases,” they note. “It has been argued (particularly by the beverage industry) that alcohol consumption might increase as a consequence of a sugar-sweetened beverage tax. We included alcoholic drinks in our analysis, and did not observe any significant changes as a consequence of the price increase of sugar-sweetened beverages.”
They also found no significant increase in snack-food purchases. Faced with higher prices on soda, shoppers switched to a different (and healthier) beverage, but did not compensate for the loss of sugar by buying more cakes or pastries.
This is good news, especially considering the tax increase studied here was a relatively moderate 12.4 percent—far below the penny-per-ounce tax sometimes suggested by healthy-eating advocates, which would add up to about 20 percent. “Moderate taxes are likely to be more feasible and politically acceptable,” the researchers note.
So such taxes appear to be well worth fighting for. And when they pass, legislators can celebrate by raising a glass—of delicious unsweetened tea.