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The Effects of a Sugar-Sweetened Beverage Tax: Consumption, Calorie Intake, Obesity, and Tax Burden by Income

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  • Lin, Biing-Hwan
  • Smith, Travis A.
  • Lee, Jonq-Ying

Abstract

Taxing sugar-sweetened beverages has been proposed as a means to reduce calorie intake, improve diet and health, and generate revenue that governments can use to address the obesity-caused health and economic burden. Two beverage demand systems were estimated using beverage purchase data for high-income and low-income households. Using the estimated demand elasticities we examined the impacts of a hypothetical 20-percent effective tax rate (or about 0.5 cent per ounce) on beverage consumption, calorie intake, tax revenue and burden. Our results suggest that such a tax would induce an average reduction of 35 and 41 calories a day among adults and children, respectively. The tax burden is found to be regressive, although representing less than one percent of household spending on food and beverages. Tax revenue is estimated to be $5.8 billion using 2007 population estimates.

Suggested Citation

  • Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying, 2010. "The Effects of a Sugar-Sweetened Beverage Tax: Consumption, Calorie Intake, Obesity, and Tax Burden by Income," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61167, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61167
    DOI: 10.22004/ag.econ.61167
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    References listed on IDEAS

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    1. ver Ploeg, Michele & Breneman, Vince & Farrigan, Tracey & Hamrick, Karen & Hopkins, David & Kaufman, Phillip & Lin, Biing-Hwan & Nord, Mark & Smith, Travis A. & Williams, Ryan & Kinnison, Kelly & Olan, 2009. "Access to Affordable and Nutritious Food: Measuring and Understanding Food Deserts and Their Consequences: Report to Congress," Administrative Publications 292130, United States Department of Agriculture, Economic Research Service.
    2. Schroeter, Christiane & Lusk, Jayson & Tyner, Wallace, 2008. "Determining the impact of food price and income changes on body weight," Journal of Health Economics, Elsevier, vol. 27(1), pages 45-68, January.
    3. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-957, Sept.-Nov.
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    Cited by:

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    2. Miao, Zhen, 2012. "Three essays on tax policies addressing the obesity epidemic and associated calorie intake," ISU General Staff Papers 201201010800003415, Iowa State University, Department of Economics.
    3. Alasdair Gardiner, 2016. "Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness," Treasury Working Paper Series 16/09, New Zealand Treasury.
    4. Colantuoni, Francesca & Rojas, Christian, 2012. "Have soda sales tax effects changed over time? Scanner data comparison analyses," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124806, Agricultural and Applied Economics Association.
    5. Jeon, Younghyeon & Hoang, Hoa K. & Thompson, Wyatt & Abler, David & Miller, J. Isaac, 2022. "Revealing the fundamental parameters of a food demand system using estimated elasticities," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322182, Agricultural and Applied Economics Association.
    6. John Creedy, 2016. "Sugar Taxes and Changes in Total Calorie Consumption: A Simple Framework," Treasury Working Paper Series 16/06, New Zealand Treasury.
    7. Maria Eugenia Bonilla-Chacin & Roberto Magno Iglesias & Agustina Sara Suaya & Claudia Trezza & Claudia Macias, 2016. "Learning from the Mexican Experience with Taxes on Sugar-Sweetened Beverages and Energy-dense Foods of Low Nutritional Value: Poverty and Social Impact Analysis," Health, Nutrition and Population (HNP) Discussion Paper Series 106595, The World Bank.

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