Eight cities in the United States have implemented taxes on sugar-sweetened beverages to combat health issues such as obesity and Type 2 diabetes. A study conducted by the University of Washington examined the impact of these taxes on purchasing behavior in approximately 400 households in Seattle, San Francisco, Oakland, and Philadelphia, all of which recently introduced beverage taxes. Results showed that lower-income households reduced their purchases of sweetened beverages by nearly 50% after the tax was implemented, while higher-income households decreased their purchases by 18%. This suggests that the taxes could help reduce health disparities and promote population health.
Consumers were given handheld scanners to report their purchases, and researchers found that households experienced price increases for taxed beverages, with the difference persisting for at least one year post-tax. Lower-income households saw a 22% increase in sweetened beverage prices, compared to 11% for higher-income households. Despite these price increases, lower-income households still showed a 47% decline in purchases of sweetened beverages. The study also found that lower-income households were substituting taxed beverages with untaxed alternatives, rather than buying other sugary snacks.
Policy makers are particularly interested in the response of lower-income consumers to these taxes, as they often consume sweetened beverages at higher rates and there are concerns about the taxes being regressive. Previous research from the University of Washington found that lower-income and higher-income households paid about the same amount toward the tax, but lower-income households spent a higher proportion of their income. However, more dollars from the tax went toward funding programs that benefit lower-income communities than the households paid in taxes, leading to an annual net benefit ranging from $5.3 million to $16.4 million per year across three U.S. cities.
In addition to the financial impact, the tax was also associated with declines in childhood body mass index (BMI) among children in Seattle compared to a matched comparison group. This suggests that the tax is having the intended health benefits, and the new evidence from the study indicates that these benefits could be even larger for households with lower incomes. The research was funded by the University of Washington’s Royalty Research Fund and the Robert Wood Johnson Foundation, with additional support from the Eunice Kennedy Shriver National Institute of Child Health and Human Development research infrastructure grant.
Overall, the study provides valuable insights into the effectiveness of sweetened beverage taxes in reducing purchases of sugary drinks, particularly among lower-income households. The findings suggest that these taxes could help improve population health by reducing consumption of unhealthy beverages and promoting healthier alternatives. The research also highlights the importance of considering the impact of such taxes on different income groups and the potential benefits for lower-income communities.