- A new study found sweetened beverage purchases fell in Philadelphia and Oakland, California following the adoption of taxes on the sugary drinks — but some consumers traveled outside those cities to shop tax-free. The study was conducted by researchers from Mathematica, Cornell University and the University of Iowa.
- After analyzing data from before and nearly a year after the taxes were adopted, researchers found the taxes had no overall detectable impact on how often children drank taxed beverages in either city. But researchers said children in Philadelphia who drank a lot of sugary beverages before the tax lowered their consumption of added-sugar beverages by 22%.
- Researchers included in-store audits of prices and product availability, interviewed customers exiting stores about beverage purchases, surveyed households about consumption and interviewed store owners. The exit interviews found purchases of taxed beverages went down by 9 ounces per trip in Philadelphia, but found no detectable impact in Oakland.
Soda taxes have long been a controversial topic and these mixed results from Philadelphia and Oakland don't help definitively prove their effectiveness. But this study shows how soda taxes are designed and implemented affects how consumers and retailers respond.
Oakland's 1 cent-per-ounce soda tax started being collected in July 2017 after voters approved it the previous November. Philadelphia has had a 1.5 cents-per-ounce tax that was approved by City Council in 2016. Collection began in 2017. Philadelphia's tax, on a wider array of beverages than the one in Oakland, is unpopular with current council members and, depending on who the city elects to leadership next month, may be on its way to being phased out.
Distributors and retailers passed most of the tax on to consumers, the study found. The pass-through rate was 105% in Philadelphia and 61% in Oakland. The average price of taxed drinks rose by 21% in Philadelphia, but only 8% in Oakland, researchers said.
Adults in Philadelphia consumed about 30% less regular soda after the tax, and the probability that an adult in Oakland consumed any regular soda reduced 9%. However, that wasn't true regarding children's consumption of sugary beverages, where no detectable impact on frequency was found. The greater impact on adult soda consumption than on children's could raise questions about whether the Philadelphia or Oakland taxes are as effective as they might be in combating obesity and diabetes, a major goal of both initiatives.
The research team did a separate study in September on how retailers in both cities responded to the soda tax. After interviewing retailers in Philadelphia, they found 14 raised prices of taxed beverages by the amount of the tax. One retailer increased prices by less than the tax rate, and one raised prices on untaxed products. Of the Oakland retailers interviewed, 10 hiked prices by the tax amount, two raised them by more and three by less. Two retailers in Oakland increased the prices of untaxed items.
Soda taxes have been controversial anywhere they've surfaced. The beverage industry opposes them for singling out sugar as the enemy, and critics say the goal of benefiting public health with the proceeds isn't being met. Philadelphia's first-year revenue from the tax was 15% short of projections. The soda industry is lobbying to ban new beverage taxes on the state level, and was victorious in California last year as state legislators and Gov. Jerry Brown approved a 12-year moratorium on soda taxes. And, as reinforced by this latest study, consumers get around the tax by shopping outside the city or county where it exists.
But soda taxes do drive down consumption of sugar-sweetened beverages. A study published earlier this year took five years of data from Berkeley, California, and found a 52% decrease in soda consumption in the first three years after the tax was adopted. Another study found that two months after Philadelphia's tax took effect, residents were about 40% less likely to drink sugary beverages on a daily basis than people elsewhere.
Soda tax supporters may have a tougher time getting them adopted since statewide bans are surfacing. Arizona, Washington and Michigan have forbidden local governments from taxing foods and beverages. Legislation establishing a statewide 2-cent-per-ounce tax in California fell short of necessary support this past spring. Without a clearer connection between soda taxes and public health benefits, there could be fewer such taxes in the future.