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Soda tax

Another reason why soda tax to reduce obesity won’t work

In the US, the idea to tax soda won’t go away and it’s on the agenda in several states and cities. For many it’s a no-brainer in advancing the nation’s war on obesity, with advocates pointing to a number of studies in recent years that conclude that sugary drinks have a lot to do with why Americans are getting fatter. Another issue has now come to the fore…

According to a new Northwestern University study, obese people tend to drink diet sodas, and therefore taxing soft drinks with added sugar or other sweeteners is not a good weapon in combating obesity.

In Illinois, a new law would add a cent an ounce to the cost of most soft drinks with added sugar or sweeteners, including soda, sweet iced tea and coffee drinks. Related to the purpose of the tax, the legislation excludes artificially sweetened and diet sodas.

“After doing the analysis, it really turns out to be the case that obese people like diet soda so much more than regular soda that you can do whatever you want to the price,” said Ketan Patel, a fourth-year doctoral student in economics. “You’re not going to get that much change in obese people’s weight because they already drink diet soda.”

Patel, who recently presented his paper “The Effectiveness of Food Taxes at Affecting Consumption in the Obese: Evaluating Soda Taxes” at a US Department of Agriculture conference on food policy in Washington, DC, said he initially didn’t know if the diet soda preference was going to be a large factor in evaluating the effectiveness of the soda tax.

“The concern I had was that maybe obese people are less price sensitive,” Patel said. “So if obese people are less price sensitive, then raising the price through a tax will affect their behaviour less.”

But that concern became irrelevant since diet drinks are not being considered in the proposed obesity tax.

Beyond its ineffectiveness in reducing obesity, such a tax also would punish consumers that are not overweight or obese, Patel said.

Is there a scenario in which increasing the tax would have an effect on weight? Patel said that could depend on whether people are at a stable weight or whether people are already eating too many calories and therefore their weight will continue to increase. If increasing weights are the status quo, then a tax could prevent people who are currently overweight or normal weight from becoming obese. More research needs to be done on this aspect, however, Patel said.

For this study, Patel used a large data set of sodas price and sales data with individual level data on demographic characteristics and body mass index (BMI) to estimate consumer preferences while allowing for substantial diversity in those preferences. After obtaining estimates of consumer preferences, Patel simulated how a tax would change the choices that consumers make and used the results of the simulation to estimate changes in weight using a weight change model from existing nutrition literature.

In the meantime, however, lawmakers say it does not look likely that the tax will be imposed anytime soon as there is little support for the measure after a recent income tax hike in Illinois.

Related studies

Small Soda Taxes Insufficient to Curb Consumption Among Children, Study Finds (Apr 1, 2010) — Small sales taxes on soft drinks in the range currently in force in some states are insufficient to reduce consumption of soda or curb obesity among children, according to a new study. But the small …  > read more

Junk Food Makes Kids Fatter, But Happier, Study Suggests (Apr 14, 2009) — Children who ate fast food and drank soft drinks were more likely to be overweight, but they were also less likely to be unhappy. The analysis also highlighted a number of factors influencing …  > read more

Soda Taxes: Weight Loss Benefit Linked to Household Income (Dec 15, 2010) — Imposing higher taxes on sodas and other sweetened drinks may generate a lot of money — but would lead to only minimal weight loss among most people and would have no effect on weight among …  > read more

Source: Science Daily

COMMENT: Here’s why food is the new fed tax target

Okay, this is just my suspicious, cynical side taking over, but why do you think food and drink is the latest target for ‘punitive’ taxing by the US govt? I know what I think … I think the government cash cow that is tobacco has transitioned from a gusher of tax $$$ to a dribble, thanks to aggressive federal regulating and on-pack warnings (though I always ask, why not just ban tobacco? Is it because the taxes are still somewhat substantial if no longer a massive windfall for the collectors?). Still, tobacco is in a mid-death wobble in this country and the White House and Feds desperately need new sources of tax revenue to replace it. The ongoing, and often phony, demonization of our industry and its products has them well on their way to achieving that goal. OMG, you didn’t actually think the government would let the tobacco well dry up without finding something to fill the space, did you?

Bob Messenger, foremost US food industry commentator/writer

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