In a new study, researchers found taxing sugar-sweetened beverages by the amount of sugar they contain, rather than by the liquid volume of these drinks, could produce even greater health benefits and economic gains.
The research was conducted by a team from New York University and other institutes.
Seven U.S. cities currently tax sugar-sweetened beverages, or SSBs, by the volume of the beverage—levies that don’t take into account the amount of sugar these drinks contain.
Despite their different sugar content and resulting in different harms, all sugar-sweetened beverages are taxed at the same rate per liter under a volumetric tax.
This tax structure gives consumers no incentive to substitute from high-sugar to low-sugar SSBs, even though the latter is less harmful.
Thus, while a volumetric tax reduces consumption of SSBs in general, it does not provide the maximum possible health benefits
A basic economic principle is that such corrective taxes should be proportional to the harm caused.
The harm from sugary drinks comes from the sugar, and SSBs vary substantially in sugar per unit volume.
The researchers note, however, that a tax on liquid volume is beneficial.
They estimate, for instance, that a 34-cent per liter volumetric tax causes the average U.S. adult to drink 2.9 fewer ounces of SSBs per day, a 22-percent reduction.
This decrease in sugar intake would help the average adult to lose 2.3 pounds. In addition, a nationwide volumetric SSB tax would reduce obesity rates by 2 percent—a 2.1 million decline in adults with obesity—and would lower the number of new Type 2 diabetes cases by 2.3 percent or approximately 36,000 new cases per year.
They add that such a tax would also result in economic gains—primarily through savings in health care costs—of about $1.4 billion per year nationwide.
However, in their assessment, a tax on the amount of sugar in SSBs would yield even greater health and economic gains.
Such a tax would cause U.S. adults to consume 2.3 fewer grams of sugar per day from SSBs than they would under a volumetric tax, helping the average adult lose an additional 0.7 pounds.
Across the U.S., a sugar tax instead of a volumetric tax would reduce obesity rates by an additional 630,000 adults and would cut the number of new Type 2 diabetes cases by another 0.7 percent—or approximately 11,000 people per year. Moreover, the additional annual economic gain would be another $400 million.
The calculations suggest that this idea offers valuable low-hanging fruit for improving public health.
The study is published in the journal Science.
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