July 1, 2009

Soda Taxes are Highly Regressive and Not Too Effective at Reducing Obesity

by Joseph Henchman

The National Center for Policy Analysis summarized recent studies on the effect of soda taxes:

• Increasing the soft drink tax by 55 percentage points would decrease the obese and overweight population by only 0.7 percentage points.
• That means a 27.5 cent tax on a 50 cent can of soda would only lower the number of the obese and overweight from 66 percent to 65.3 percent of the population.

Such excise taxes are also highly regressive:

• On average, the bottom fifth of income earners spend 1.7 percent of their gross income on alcoholic beverages compared to 0.6 percent for the top 20 percent.
• They spend 2.5 percent of income on tobacco products versus 0.2 percent for the top 20 percent.
• They spend 9.9 percent on gasoline and motor oil compared to 2.3 percent for the top 20 percent.

See their full report here.

More on excise taxes here.