Janson Prieb and Aaron Morrison, American Consumer Institute
There is currently a global campaign to reduce the consumption of soda and ensure that consumers have healthier alternatives. Philadelphia, for instance, is contributing to the campaign through a soda tax while across the pond, the U.K. has implemented a sugar tax. However, despite lawmakers’ best efforts to improve public health, these disastrous policies have only resulted in job loss and economic decline. Even worse, they have not even improved public health. In truth, whether it’s taxing soda or sugar, these ineffective policies deserve to fizzle out.
Since 2014, eight U.S. cities have implemented sugar-sweetened beverage (SSB) taxes. It’s been six years since then, and there is little to no evidence that this approach has reduced the overall consumption of sugar. Often, these policies, both domestic and abroad, cause more harm than good as lawmakers believe they are promoting public health, but in reality, are far from it.
The American Consumer Institute’s recent report highlights the effects of SSB taxes in the U.S., and the findings aren’t optimistic. Harmful consequences like cross-border shopping, an unintended tax burden on lower-income households, and the lack of sugar-beverage substitutes, should cause lawmakers to wonder if soda taxes are effective at all.
For instance, the report shows that after Philadelphia passed its SSB tax, people were willing to shop outside the city limits to avoid the tax. Because of this change in consumer behavior, supermarkets were losing an average of $80,000 a month from a reduction in beverage sales. Additionally, supermarket sales of other products, including soup, yogurt, vegetables, cheese, and fresh bread, plummeted by 8 to 14 percent as consumers were combined their purchases outside the city. The total loss attributable to the tax was $300,000 per month per store.
And while soda taxes within the U.S. have proven ineffective, some believe sugar taxes are a better solution. They aren’t.
For example, in 2018, the U.K. passed a sugar tax in the hopes to promote consumer health. By implementing the tax on a national basis, the idea was to stem cross-border substitutes, like those observed in Philadelphia and Seattle. However, this approach wasn’t without negative repercussions.
Researchers in the U.K. found that even though less sugar was being consumed through beverages, people ate more sugary food instead. Overall, sugar consumption in the U.K. rose by 2.6 percent between 2015 and 2018. The increase resulted from people eating highly diverse and sugary foods such as ice cream and sorbets. The amount of sugar that people consumed from such products rose by 16.3 percent during 2017 and 2018, and from biscuits (cookies) by 3.1 percent, according to Public Health England. In the end, U.K.’s attempt to bypass the soda tax with a sugar tax was ineffective.
If the U.S. seeks to improve the overall health of consumers by tackling sugar, then it can no longer implement narrow policies that are not only ineffective but devastating to local economies. There have not been any significant shifts concerning obesity rates as evident from the soda tax here in the U.S. or the sugar tax in the U.K. Whether it’s soda or sugar taxes, the U.S. should steer clear of failed policies until we understand the broader picture of public health.
Janson Prieb is a policy analyst and Aaron Morrison is a policy intern at the American Consumer Institute, an education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.