Intended for healthcare professionals

Observations Yankee Doodling

The case of the sugar sweetened beverage tax

BMJ 2010; 341 doi: https://doi.org/10.1136/bmj.c3719 (Published 14 July 2010) Cite this as: BMJ 2010;341:c3719
  1. Douglas Kamerow, chief scientist, RTI International, and associate editor, BMJ
  1. dkamerow{at}rti.org

    A cautionary tale of political influence

    We are fat, and we’re getting fatter. Nearly a third of American children are overweight or obese. In our inner cities a prevalence of obesity of more than 50% among both children and adults is not uncommon. Too many calories in, too little energy out.

    Changing behaviour is hard. Obesity has several causes, and it will take a multifaceted campaign to reverse the trend. The tobacco experience has taught us that education is not enough: regulation, litigation, and legislation are needed too. Increasing taxes on cigarettes has been the single most effective strategy in reducing smoking.

    Which brings us to the sad story of the tax on sugar sweetened beverages (SSBs).

    An important part of the obesity story is clearly the huge increase in consumption of SSBs: carbonated sodas, sweet teas, energy drinks, flavoured water, and sports drinks. Their use has more than doubled in recent years, and of all food types they are the single largest contributor to energy intake in the United States.

    Especially perniciously, SSBs have essentially no effect on satiety, research shows—unlike candy or other junk food. Our bodies seem not to sense the empty calories we’re swallowing and to count them towards feeling full. Gobble some jelly beans and you feel like you’ve had something to eat. Drink a cola drink: no such feeling. Add in the fact that the price of SSBs has actually fallen after adjustment for inflation and you have the makings of a big problem.

    Experts have been agitating for a “penny per ounce” tax on SSBs for about two years. An excise tax imposed at the wholesale level has several advantages over a percentage sales tax collected at the cash register after the purchases have been totalled. Because it is imposed at the wholesale level, an excise tax is easier to implement. It is then passed on to the consumer in higher retail prices, allowing price sensitivity to work its magic. Also, it produces the same tax on a discounted generic soda as on a brand name drink. Thus, rather than driving people to purchase cheaper products or larger serving sizes to get a better price, as a sales tax does, excise taxes can actually reduce consumption. What amounts to about a 10% tax will likely lead to an 8-10% reduction in consumption.

    Just as with tobacco products, we especially want to discourage young people from buying and consuming SSBs, and the young are notoriously price sensitive. And poor people, who are disproportionately obese, are the most price sensitive in food shopping.

    Simple sales taxes have been shown not to work. They don’t change behaviour or weight. The best chance for success is to impose a penny per ounce SSB tax, resulting in a rise of a dollar or two in the price of a six pack of sodas or a 2 litre bottle. Pilot studies and some early research have found promising decreases in consumption and even positive health outcomes from such pricing strategies. Public opinion polls have found that most people are in favour of such taxes. It seems like a pretty good public health strategy.

    Needless to say, SSB manufacturers and retailers did not think these taxes were a very good idea at all. This was a threat they would beat back at any cost.

    The industry’s response to proposed SSB taxes has been swift and massive. In cities and states where SSB taxes have been proposed, industry financed “grassroots” organisations sprang up out of nowhere. They had names like “New Yorkers against Unfair Taxes” and “NoDCBevTax.com.” Their websites listed dozens of ordinary citizens and small mom-and-pop stores as members, masking the source of their funding: the major soft drink companies and retailers (see www.nytimes.com/2010/07/03/nyregion/03sodatax.html and http://voices.washingtonpost.com/dc/2010/05/council_all_but_kills_soda_tax.html).

    In New York state, projections found that a penny per ounce tax on SSBs could prevent 145 000 cases of adult obesity and 37 000 cases of diabetes in a decade. It could save $2bn (£1.3bn; €1.6bn) in healthcare costs. To fight the tax, SSB manufacturers paid $90m to the same public relations firm that created the famed “Harry and Louise” advertisements against US health reform in the 1990s. Their signature TV spot showed a housewife urging viewers to “tell Albany [the state capital] to trim their budget fat and leave our groceries alone.” The governor withdrew his tax proposal.

    Washington, DC, was another battleground: a liberal, black majority city with chronically underperforming schools and a large budget deficit. A city council member proposed a penny per ounce SSB tax to decrease obesity and fund better school food and exercise programmes. Immediately we heard insulting but effective radio advertisements with stereotyped African American voices saying that “soda’s ’bout to git waaay more expensive” because of unfair taxes. It wasn’t even a close contest. The city council chairman never called for a vote on the proposal.

    The story was the same around the US. In many cities and states proposals were withdrawn in the face of “public” protest and petitions. In others excise taxes were converted to ineffective sales taxes. Public health was outgunned and outspent. SSBs are still safe for all to buy and enjoy at record low prices.

    As the mayor of Philadelphia said about the victory of the beverage lobby’s campaign, “They’re successful the old fashioned way. They pay for it.”

    Notes

    Cite this as: BMJ 2010;341:c3719

    Footnotes

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