Caloric Sweetened Beverage Taxes: A Toothless Solution?

Abstract

We lay out a framework for assessing if calorie sweetened beverage taxes are effective, and, concluding they are not, provide recommendations for better solutions. Similar taxes, known as sin taxes, generally have three specific goals: 1) to lower consumption of the offending substance or activity; 2) to minimize the black market; and 3) to generate government revenues. We find that on the whole, caloric sweetened beverage taxes fail to meet each of the criteria for effective sin taxes. They neither meaningfully lower consumption of caloric sweeteners generally, nor do they provide for a healthier alternative. They are straightforward to geographically circumvent, and there are many carve outs which are not taxed, dampening the impact they could have on the consumption of caloric sweeteners. Although these taxes are potentially a significant source of tax revenue, such collections are largely and disproportionately borne by the poor. Instead, we propose enacting a broad policy on a national level consisting of three components: 1) removing government support for caloric sweeteners, 2) levying a federal excise tax on caloric sweeteners at the producer level, and 3) investing in research, implementation of significant subsidies, and development and transmission of explicit government advice in favor of foods that are irrefutably beneficial for the vast majority of human beings.