A American study published in June 2017 in PLOS Medicine, Reducing US cardiovascular disease burden and disparities through national and targeted dietary policies: A modelling study, compared different policy interventions to reduce cardiovascular diseases. The interventions included:
- A 10% tax on SSBs
- A 10% subsidy on fruits and vegetables
- A 30% subsidy only for citizens participating in the Supplemental Nutrition Assistance Program (SNAP)
- A national media campaign on buying more fruits and vegetables and less SSBs
- A combination of the above
The study demonstrated that the 2nd intervention was by far the more cost-effective, up to five times more compared to the 10% tax on SSBs.
The authors warn readers that their model did not look at the financial implications of the different interventions.
The full study is available here.
For the first time since the introduction of Philadelphia’s 1.5 cents-per-ounce tax on soda and other sweetened drinks 3 months ago, city officials are already lowering their revenue projection as the tax turned out to represent an unstainable revenue stream due to consumers shopping elsewhere.
According to city Controller Butkovitz, the chief accounting officer of the city: “While the city lowered its initial budget projections for the first two months and then reported better-than-expected revenues, the fact is the city’s initial budget projections indicated that the Beverage Tax needed to generate $7.7 million every month”. Instead, he has reported that the monthly average is $6.4 million. He warned that this could potentially create important difficulties for the city to fund new programs and initiatives. The press release from the city controller is available here.
What is more, it was reported that the tax had forced layoffs as a result of tanking sales of beverages in the city due to this onerous tax. More info on the devastating consequences of the tax can be found here and here.
In January 2015, the city of Berkeley (United States, California) introduced a tax on sugar-sweetened beverages at a rate of one-cent-per-ounce with the clear objective of lowering consumption of thetargeted products. In a report issued in August 2015, economists John Cawley and David Frisvold show that “there was relatively little pass through of the Berkeley SSB tax to consumers”.
A key reason is that retailers cover the cost of the tax in order not to drive consumers towards stores located outside of Berkeley. As a consequence, the tax is only levied on businesses and shops and are not uniformly transmitted to the consumer price. The authors estimate that “across brands and sizes, we estimate that retail prices rose by less than half of the amount of the tax”, meaning that at least 50% of the tax becomes exclusively a new burden for small businesses and that the tax “will result in less of a reduction in consumption, and thus less health improvement, than anticipated”.
Those conclusions are echoed by the ones from the study on the impact of food taxes on competitiveness in the agri-food sector commissioned by DG GROW (European Commission) in 2014, which concluded that “there is no clear and uniform transmission of taxes to consumer prices due to strategic pricing behaviour by manufacturers and retailers” (p. 24) and that “an ad valorem tax and situation of high ex ante margins will likely result in undershifting with firms bearing part of the tax through reduction of margins” (p. 33). As a conclusion, a tax on sugar-sweetened beverages would not only be inefficient in fulfilling its objectives of lowering consumption but will effectively hurt businesses and competitiveness.
Obesity is a critical global issue that requires a comprehensive, international intervention strategy.
Much of the global debate on this issue has become polarized and sometimes deeply antagonistic. Obesity is a complex, systemic issue with no single or simple solution. The global discord surrounding how to move forward underscores the need for integrated assessments of potential solutions.
A new McKinsey Global Institute (MGI) discussion paper, Overcoming obesity: An initial economic analysis, seeks to overcome these hurdles by offering an independent view on the components of a potential strategy.
The main findings of the discussion paper include:
- Existing evidence indicates that no single intervention is likely to have a significant overall impact.
- Education and personal responsibility are critical elements of any program aiming to reduce obesity
- No individual sector in society can address obesity on its own
Read the full paper here.
This systematic academic review focused specifically on the role of sugar-sweetened beverages in obesity risk, taking into account energy balance.
Scientific conclusions could not be drawn from the intervention studies that evaluated the relationship between sugar-sweetened beverage intake and obesity risk.
Results of observational studies that examined the relationship between sugar-sweetened beverage intake and obesity risk that were adjusted for energy intake and physical activity were inconsistent for each of the three age groups evaluated (children, adolescents, and adults).
From this review, evidence for an association between sugar-sweetened beverage intake and obesity risk is inconsistent when adjustment for energy balance is made.
Read the full study here.
First published in ‘Nutrition Reviews’, Volume 72, Issue 9, pages 566–574, September 2014
Authors: Paula R Trumbo and Crystal R Rivers