Soda Taxes: Weight Loss Benefit Linked to Household Income

More data demonstrating that this stupid idea will not work.

Imposing higher taxes on sodas and other sweetened drinks may generate a lot of money -- but would lead to only minimal weight loss among most people and would have no effect on weight among consumers in the highest and lowest income groups, according to new research from Duke-National University of Singapore (NUS) Graduate Medical School.

The study, led by Eric Finkelstein, PhD, associate professor of health services at Duke-NUS, looked at the differential impact on calories and weight of a 20 percent and 40 percent tax on sodas and other sweetened beverages (SSBs) among different income groups.

The research, appearing in the Archives of Internal Medicine, comes at a time when health policy makers are considering additional taxes on sweetened drinks as a means of improving health and raising revenue to offset budget deficits. Some studies show that excess consumption of sugary drinks leads to weight gain and contributes to the epidemic of obesity in the U.S.

The researchers relied on information in a database of U.S. households that tracked their store-bought food and beverage purchases over the course of a year. The database includes information on household size, demographics and the cost and quantities of foods and beverages purchased by brand and UPC code.

The research team examined store-bought purchases of carbonated and non-carbonated drinks, including sodas, diet carbonated beverages, sports/energy drinks, fruit drinks, fruit juice and skim and whole milk and used statistical techniques to quantify how changes in prices affected household buying habits.

Unlike prior analyses, the study calculated both weight losses resulting from reductions in soda purchases as a result of the tax and weight gains due to switching to other beverages. "If consumers switch from Coke to Diet Coke or water there would be no offsetting gains, Finkelstein said. "If they switch to other high calorie drinks, the effects of the tax would be diluted."

Researchers estimated that were the government to impose a sales tax that raised the price of SSBs purchased by 20 percent, this would generate about $1.5 billion per year in tax revenue in the U.S.; a tax that raised prices by 40 percent would generate $2.5 billion per year, at a cost to the average household of about $28.

Study coauthor Chen Zhen, PhD, a research economist at RTI International, says these taxes are regressive in the sense that the tax paid as a percentage of household income is greater for lower income households than for higher income households. "However, because poor households purchase far more generic brands that are significantly cheaper, they pay a smaller share of the total tax revenue." The study found that the tax paid by lower income households would end up accounting for 20 percent of total tax revenue whereas those in each of the two middle income and high income groups would contribute 25 and 30 percent of the total, respectively.

But would these taxes reduce weight? Results show that because of switching from SSBs to other beverages, the effect on total calories and weight is relatively small. A tax that raises SSB prices by 20 percent generates a daily average reduction of 6.9 calories. Over the course of a year, this equates to no more than 0.7 pounds per household member. A 40 percent tax would reduce daily calories by 12.5 calories and generate annual weight losses of up to 1.3 pounds per person per year.

But, since stupid never works, expect the government to push hard for it.