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Study shows sweetened beverage tax doesn’t change costs of water, milk, and other drinks

In the first analysis of its kind, a new report published in the American Journal of Public Health measured the impact of one-cent-per-ounce excise taxes on sugar-sweetened beverages in the cities of Oakland and San Francisco. The report, co-written by Berkeley Food Institute Director Kristine Madsen, MD, aimed to find how these excise taxes increased the prices of sugar-sweetened beverages, a well-documented tactic to reduce their consumption.

Oakland and San Francisco became the first major cities in California to pass excise taxes on sugar-sweetened beverages in November 2016. Currently seven cities and the Navajo Nation have passed similar taxes to curb chronic disease and mounting health care costs. Excise taxes also fund public health education and equity programs.

Researchers looked at the taxes on both sugar-sweetened beverages and non-sugar-sweetened beverages from April to May 2017, prior to the excise tax increase. Researchers then compared these prices to retail prices after the applied excise tax from April to May 2018. These retail prices were also compared to the prices of sugar-sweetened beverages found in cities without an excise tax.

Researchers found that the retail prices of water, milk, and 100% juice were not significantly affected by this excise tax.

“SSB [sugar-sweetened beverages] taxes in the U.S. are all paid directly by SSB distributors—these taxes reflect local government efforts to hold industry accountable for unhealthy products,” Madsen said. The industry then passes along the increase in costs. “The present study shows that SSB distributors end up charging more for their unhealthy products.”

Excise taxes on sugar-sweetened beverages in Oakland and San Francisco have raised over 30 million dollars in 2019 and this revenue has been allocated to nutrition, physical activity, parks, food and water access, and public health promotion with a focus on equity.

The report concluded that within four to 10 months of implementing the excise taxes in Oakland and San Francisco, the retail prices of sugar-sweetened beverages increased in the amount of the excise taxes applied. These tax increases are documented to be an effective method for reducing consumption of sugar-sweetened beverages and reducing nutritional disparities as taxes were equitable impacts on price by neighborhood socioeconomic status.