Should sugared drinks be taxed?

NEW YORK, N.Y.; April 9, 2009

As with every disaster, the state of our economy highlights opportunities for good health and risks of doing more damage.

Desperate for revenue, states are considering taxes on sugared beverages, those drinks with added sugar, high fructose corn syrup or other caloric sweeteners.

Forty states now have taxes on soft drinks or snack foods, all too small to affect consumer decisions. But bigger changes may be on the way with recent proposals, most notably an 18 percent tax on sugared beverages put forward by the governor of New York.

Nobody likes the idea of more taxes, so the bar must be set high to consider such action, particularly given the strenuous objections of the beverage industry.

The first question is, "Why pick on sugared beverages?" There are many contributors to ill health (genes, environment, physical inactivity and more). Even considering foods leaves many possibilities; fast food and snack foods would be examples.

Enter the science: Sugared beverages, more than any other category of food, have been shown time and again to be linked with poor diet overall and to risk for obesity and diabetes. Most of the studies that do not make this link are funded by the beverage or sugar industries. Recent studies show that lowering soft drink consumption leads to healthier weights.

In the 1970s, the average American consumed 70 calories per day from sweetened drinks, rising to 141 calories in the 1990s and 190 calories as this century began. Sugared beverages now account for 10 to 15 percent of all calories consumed by children and adolescents.

There is no sign that these additional calories are being offset by changes people make elsewhere in their diets. Studies show that people compensate less well in subsequent meals when extra calories are consumed in liquid than in solid foods, so there does seem something special about sugar in beverages. A study of children by researchers at the Harvard Medical School found that with each additional serving of sugared beverage consumer per day, the likelihood of obesity rose by 60 percent.

For these reasons, nutrition experts argue that the very high consumption of sugared beverages is a logical place to address the toll that chronic diseases take on the country. Obesity, which is only one of many diseases affected by poor diet, carries massive health care costs ($79 billion annually), about half of which are covered by Medicare and Medicaid. Furthermore, these estimates do not include the cost to society of lost work days, diminished school performance and even the fitness of military recruits.

Would taxes help? Certainly they have with tobacco; smoking in the U.S. has declined dramatically, and high taxes have been established as the top driver. Economic studies on soft drinks show that a 15 percent tax on sugared beverages should drop consumption by 12 to 15 percent, and higher taxes would have stronger effects. This is enough to make a real difference to the public's health.

If the government were to create educational programs with this goal in mind, billions could be spent and the goal might never be achieved. A tax would generate revenue, and a lot of it. A penny per ounce tax in New York state alone would raise $1.2 billion annually.

It is common to think of sales taxes, but these have several disadvantages. One is that consumers do not see the increased price on the shelf and the other is that it encourages consumers to buy large containers (because the cost per ounce is lower, the tax per ounce is lower). An excise tax of a penny per ounce would be better.

Polls show that consumer support for taxes varies, depending on how the issue is presented. Support can be as low as 37 percent if a "fat tax" or "obesity tax" is suggested in isolation. A recent poll in New York state found that 52 percent of consumers were in favor of a soda tax, but the number rose considerably -- to 72 percent -- if the revenue generated by the tax would be used for obesity prevention programs for children and adults.

The idea of taxing sugared beverages is highly controversial but is probably here to stay. The need for revenue and to control health care costs are just too pressing.

Kelly Brownell is director of the Rudd Center for Food Policy and Obesity at Yale University.

This article is based in part on an article written by Brownell with Dr. Thomas Frieden, published this week in the New England Journal of Medicine.

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