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Avoidance behaviors circumventing the sugar-sweetened beverages tax

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  • Zhang, Qi
  • McCluskey, Jill J.
  • Gallardo, R. Karina
  • Brady, Michael P.

Abstract

Taxes on sugar-sweetened beverages and other types of “sin taxes” are usually introduced at the local level and on the supply side; the efficacy of such taxes is challenged by tax avoidance behavior. In this study, we evaluate the impact of sugar-sweetened beverage taxes in Seattle, WA; Boulder, CO; Cook County, IL (Chicago); Philadelphia, PA, and two cities in the San Francisco Bay Area in California (Berkeley and Oakland). We use grocery scanner data relying on a series of difference-in-difference designs. Results show that each cent per ounce of taxes causes the price of the taxed beverages to increase in a range from 0.47 to 0.98 cents/ounce, and the sales quantity of taxed beverages to decrease in a range of 5.1–14.4%. But the efficacy of the sugar-sweetened beverage tax is undermined by two avoidance behaviors: (1) cross-border shopping avoidance, where people shop outside of the taxed area; (2) substitution avoidance, in which people switch from taxed to tax-exempt beverages that are just as high in sugar. The results from this study provide evidence that sugar-sweetened beverage taxes can be effective. However, to enhance the effectiveness of the taxes, policy makers should consider tax avoidance when developing future similar policies.

Suggested Citation

  • Zhang, Qi & McCluskey, Jill J. & Gallardo, R. Karina & Brady, Michael P., 2021. "Avoidance behaviors circumventing the sugar-sweetened beverages tax," Food Policy, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:jfpoli:v:105:y:2021:i:c:s0306919221001469
    DOI: 10.1016/j.foodpol.2021.102166
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    1. Cawley, John & Frisvold, David, 2023. "Review: Taxes on sugar-sweetened beverages: Political economy, and effects on prices, purchases, and consumption," Food Policy, Elsevier, vol. 117(C).

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