Small soft-drink tax insufficient to reduce consumption, decrease obesity in most children

Small sales-tax increases on soft drinks may reduce consumption and curb obesity for some at-risk children, but an increased tax may be required to reduce consumption for all children, according to new data published in Health Affairs.

“To have a measurable effect on consumption, taxes need to be tied to consumption, and they need to be larger than the existing state variation in sales taxes,” the researchers wrote.

Tax proposals on soft drinks and other sugar-sweetened beverages were created to decrease high-caloric drink consumption and decrease weight gain. They have been implemented in some states and are typically not much higher than 4% in grocery stores.

For this study, researchers estimated the potential effect of soft-drink taxes on children’s consumption and weight by examining differences in existing sales taxes on soft drinks between states. Details about state soft-drink taxes were compared with data on weight and soft-drink consumption among 7,300 fifth-graders enrolled in the Early Childhood Longitudinal Study.

Tax effect

Children reported drinking an average of six soft drinks per week; 15% reported drinking none in the prior week and 10% reported drinking two or more per day.

Sales taxes on soft drinks in each state were matched to data for each child. Existing soft-drink taxes did not significantly affect overall amounts of soft-drink consumption or rates for obesity in the study population.

For each 1% increase in soft-drink taxation, the reduction in total soft drinks per week was 0.004 and the reduction in soft drinks purchased at schools per week was 0.010. Overall BMI was decreased by 0.033 (P<.05).

Results of a subgroup analysis indicated that mean total and school-purchased soft-drink consumption decreased by 0.125 and 0.103 soft drinks per week, respectively, for each 1% increment in soda taxation; however, there was no effect on BMI.

The higher sales tax on soft drinks in some states appeared to reduce soft-drink consumption and curb weight gain among specific groups of children. Specifically, each 1% tax difference between soft drinks and other foods was associated with a 0.222 decrease in BMI among those at risk for becoming overweight (P<.05). Children of low-income households (<$25,000) and those who watched more than nine hours of TV per week consumed fewer sodas overall (0.029) and in school (0.142) per week for each 1% of tax (P<.05). Overall, children in these groups drank more soft drinks than other children.

The analysis found no significant link between the consumption of soda or weight gain among children and differential taxes on sodas vs. other foods. Existing differential taxes (taxes that are imposed on sodas and not other food items sold in grocery stores) are small, averaging 3.5%, but none are more than 7%.

The fact that small sales taxes have no strong effect on consumption should not be surprising, according to the researchers. Other proposed soft-drink taxes are likely to have a much larger effect; the researchers suggested that the proposed 18% soft-drink tax that was dropped from the New York budget last year could help prevent excessive weight gain among third- and fifth-graders by 20%.

“In order for soda taxes to be most effective, they should be structured as an excise tax that would increase the shelf price of the product rather than a sales tax collected at the cash register,” the researchers wrote. “The latter may often not be clearly linked to the purchase of soda. One such approach to creating an excise tax would be to levy a tax on the sugar content of soda drinks.”

Sturm R. Health Affairs. 2010;doi:10.1377/hlthaff.2009.0061.