Proposed tax on sugar-sweetened beverages could generate revenue, reduce obesity rates

A group of medical researchers are proposing a 1-cent per ounce tax on beverages that contain any added caloric sweetener as an attempt to alleviate escalating health care costs and the rising number of diseases related to poor diet.

In a health policy report published in The New England Journal of Medicine, researchers at Yale, Harvard School of Public Health and other U.S. institutions explained that the link between sugar-sweetened beverages and obesity, as well as type 2 diabetes and cardiovascular disease, has been demonstrated in several studies, including the Nurses’ Health Study.

The researchers claim the 1-cent per ounce tax would increase the cost of a 20-oz soft drink by 15% to 20%. Price elasticity suggests a decrease in consum-ption of 8% to 10%, with an even greater decrease in consumption expected after consumers begin switching to diet beverages. The researchers estimated that consumers would substitute calories in other forms for 25% of the reduced calorie consumption, leading to a minimum reduction of 10% in calorie consumption or 20 kcal per day from sweetened beverages, which they said is sufficient for weight loss and risk reduction.

The 1-cent per ounce tax would generate $14.9 billion in the first year, according to the researchers. The money generated could be used to support childhood nutrition programs, obesity prevention programs, health care for the uninsured or to help meet general revenue needs. At the state level, the researchers wrote that revenue would range from $139 million in Arkansas to $1.8 billion in California.

An alternative to the 1-cent per ounce tax would be to tax beverages that exceed a threshold of grams of added caloric sweetener. The researchers suggested this threshold be set at 1 g of sugar per ounce. The specific excise tax — a tax levied on units such as volume or weight — could be levied on the producers and wholesalers, according to the researchers. The cost would then be passed along to retailers, which would incorporate it into the retail price, therefore making consumers aware of the cost at the time of purchase.

Although the researchers emphasized the need for an excise tax, rather than a sales tax, they did suggest states that currently exempt sugar-sweetened beverages from sales taxes eliminate this practice.

However, consumer groups have expressed disagreement with such a tax.

“Taxes on soda are a distraction that won’t address the real problem facing overweight Americans — an epidemic of inactivity,” J. Justin Wilson, senior research analyst at the Center for Consumer Freedom, said in a press release. “The American people overwhelmingly oppose it and science shows that it will have little to no impact on our weight.”

Last month, the Center for Consumer Freedom called on President Barack Obama to abandon ideas of a new tax on soft drinks after he was quoted saying he is open to “sin taxes” on soda in hopes of curbing obesity. The nonprofit group cited data that indicate these taxes do nothing to address the problem of obesity, and instead show that physical inactivity is the single largest contributor to obesity among children.

Further, results of a recent Opinion Research Corporation poll of 1,006 Americans reveal that 65% of those polled disagree that soft drinks should carry extra taxes to discourage their consumption. – by Tina DiMarcantonio and Katie Kalvaitis

Brownell KD. N Engl J Med. 2009;doi:10.1056/NEJMhpr0905723.

I got some flak for a blog I wrote recently in which I indicated that in some patients, probably most, obesity is an eating disorder just as are anorexia and bulimia. As such, obesity should be treated/managed and not punished.

The NEJM article makes a compelling case for the contribution of sugar-sweetened beverages to obesity and that consumption would decrease if they were priced out of the market by adding a special tax. It is also true that the tax revenue could be put to good use by spending it on the management of obesity. But that’s not an approach to obesity that I would favor, and why just tax sweetened beverages?

Ideally, obesity should be prevented, but I’m not certain that we have enough understanding of the underlying biology to develop a universally effective program; we know enough to make a good start. Placing nutritional information on packaged foods and beverages has not had any appreciable effect on the prevalence of obesity because it was never linked to any meaningful public education.

What is needed is a well-developed education program starting in grade school, and such programs already exist. The Power of Prevention initiated by Donald Bergman, MD, from Mt. Sinai School of Medicine should be brought to the attention of the Secretary of Health and Human Services and the Secretary of Education, and the program, or something similar, should be incorporated into the grade school curriculum ASAP.

– Michael Kleerekoper, MD, MACE

Director, Endocrinology Fellowship Program, Rechert Health Center, Saint Joseph Mercy Hospital

Undoubtedly, the epidemic of obesity that we are experiencing in the United States, and the world for that matter, is having a major impact on the health of the nation. The high sucrose in the diet of Americans compared to, say, Europeans is one of many factors involved in the increase in obesity. One way to reduce this effect is to reduce the intake of sweetened sodas. It is very unlikely that education alone will impact on the use of sodas, and drastic measures are sometimes necessary. We all recall the important effects of implementing laws regarding seat belt use or taxes on tobacco. A tax on sodas is being considered as a means of reducing their intake. It is a regressive tax, in that it will cost the lower income groups relatively more than upper-middle class individuals, but if the proceeds are guaranteed to go toward health care needs, it would be a win-win situation; if it went to state spending on other programs, then I would not be that supportive.

– Derek LeRoith, MD, PhD

Chief, Division of Endocrinology, Diabetes & Bone Diseases, Mt. Sinai School of Medicine

A proven way to decrease the utilization of alcohol and tobacco products is to apply a ‘sin tax.’ This should also be effective with sugar-sweetened beverages if the taxation is severe enough to qualify for ‘aversion therapy.’

– David S. H. Bell, MD

Professor of Medicine, University of Alabama School of Medicine

This is a very naive paper based more on fiction than fact. It makes one wonder who peer reviewed it. Was it Big Brother?

Let’s consider the medical realities. Without the use of medications, terminal cancer or amputation, a review of the literature shows that less than 5% of people are able to lose 20 lb or more and keep it off.

Oprah Winfrey could be considered the poster child for this statement. She has lost the same 50 lb multiple times, only to gain it back again. If there is any question as to whether there is ‘money in fat,’ note the plethora of weight loss programs available in our country today. Unfortunately, most are only successful in the ‘medical debridement’ of the patient’s wallet.

In a rich prosperous society, food is readily available and so are many labor-saving devices. One result of this is obesity. But consider the alternative: In poor societies, obesity problems don’t exist because the people must work very hard for every morsel of food they are able to scrape from their meager existence. It is in the poorest societies that we see the greatest weight loss occurring.

In light of this, perhaps the authors are right in recommending that the tax code be used to decrease the consumption of sugared soft drinks. But they don’t go far enough with their meager excise tax of 1-cent per ounce on beverages. To be successful, they will need to tax substantially not only these drinks but also Twinkies, Bon-Bons, meats, fruits, vegetables and all of the other foods and products that we buy.

To correct the problem of excess caloric intake, they will need to get to the root of the problem — which is wealth. By removing their wealth, people will not have the money to buy excessive amounts of food. In light of this, the authors should take pleasure in the current deficit spending of trillions of dollars by our government. When the bill comes due, our taxes will skyrocket and our society will become poorer, but at least we will all be ‘healthier.’

– Richard Dolinar, MD

Senior Fellow in Healthcare Policy, Heartland Institute