The Economics of Taxes on Sugar-Sweetened Beverages: A Review of the Effects on Prices, Sales, Cross-Border Shopping, and Consumption

Abstract

During the past decade, dozens of countries, regions, and cities have enacted taxes on sugar-sweetened beverages (SSBs). They have been primarily motivated by a desire to raise prices, reduce sales and consumption, improve population health, and raise revenue. This review outlines the economic rationale for SSB taxes and illustrates their predicted effects. It reviews the research on the effects of these taxes on retail prices, sales, cross-border shopping, consumption, and product availability. The evidence indicates that the amount by which taxes increase retail prices (also called the pass-through of the tax) varies by jurisdiction, ranging from less than 50% to 100% of the tax. Sales tend to decrease significantly in the taxing jurisdiction, although this seems to be partly offset by residents increasingly shopping outside of the taxing jurisdiction (i.e., engaging in cross-border shopping).Overall, taxes lower consumption of the taxed beverages by adults, although not for all types of beverages or all groups of consumers. We conclude with suggestions for improving the design of such taxes and directions for future research.

Distribution of sugar-sweetened beverage sales volume by sugar content in the United States: implications for tiered taxation and tax revenue

“…Therefore, all revenue estimates should be considered as upper bounds. Third, we also assumed that the taxes for the flat tax and for each tier were fully passed on to consumers, yet evidence from the USA reveals a range of tax pass-through from partial to over-shifting with heterogeneity by store type and beverage categories and sizes [28]. Further, no evidence exists on tax pass-through for discrete tiered taxes and one recent study on the South African HPL based on sugar content per gram showed that prices rose similarly for high-and low-sugar beverage products rather than linearly based on the tax design [21].…”

Scaling-Up Food Policies in the Pacific Islands: Protocol for Policy Engagement and Mixed Methods Evaluation of Intervention Implementation

“…Despite increasing evidence of the potential impact of food policy interventions globally [15,19,21,[60][61][62], there is little locally speci c evidence and even less evidence about implementation processes for the Paci c. This project will strengthen the scaling up of interventions to improve diet in Fiji and Samoa.…”

Taxes on Sugar-Sweetened Beverages

“…Elasticity of supply (the expected proportional change in product supplied for a given percentage change in price) is shaped by the competitiveness of the local manufacturing and retail markets (Cawley et al 2019). Elasticity of demand (that is, the expected proportional change in product demand for a given percentage change in price) is shaped by a wide range of factors, including local preferences, incomes, advertising, availability of substitutions, and ease of cross-border shopping (avoiding the tax by shopping outside of the taxing jurisdiction) (Cawley et al 2019).…”

“…• When demand is imperfectly elastic, sales can be expected to fall somewhat, but less than if demand was perfectly elastic (Cawley et al 2019).…”