Do Soda Taxes Work? Despite a Weird Side-Effect, Philly's Soda Tax Worked

Berkeley’s soda tax — levied on sugar-sweetened beverages — was one of the first soda taxes in the country, resulting in a dramatic drop in soda sales on the West Coast. Now, we have proof that soda taxes can work on the East Coast, too. On Tuesday, a study published in JAMA outlines how Philadelphia’s soda tax has played out, and despite some strange soda tourism, sales in the city have plummeted.

The study shows that Philly’s soda tax decreased soda sales by 51 percent, leaving an estimated 1.3 billion ounces of soda on the shelves of 291 stores city-wide. But some enterprising Pennslyvanians sought their soda fixes anyway — several zip codes outside the city limits saw increases in sales, offsetting that drop slightly.

Study author Christina Roberto, Ph.D., an assistant professor of medical ethics and health policy at the University of Pennsylvania, tells Inverse says that she’s not overly worried about people who seek refuge from soda taxes across state lines. Even after accounting for the effects of soda migration, the tax still curbed sales by 38 percent. If anything, she argues that it adds fuel to the idea that state- or national-level taxes would be even more effective.

“I’m not concerned about that” Robertson says. “Some people will go over the city line and avoid the tax. I do think the implication of that is you’re going to be even more effective if you have a state-level tax, and even more effective if it’s a country-level tax.”

The health risks of sugary beverages is well-established: Sugar-sweetened drinks have been linked to increased risk of death and high healthcare costs. Still, soda taxes remain controversial. For what it’s worth, this study reports funding from Bloomberg Philanthropies, a charitable organization founded by former New York City Mayor Michael Bloomberg, who has been supportive of the soda tax, and Philadelphia Mayor Jim Kenney, who is currently up for reelection.

"Some people will go over the city line and avoid the tax."

But Philadelphia has also seen its fair share of industry lobbying against the soda tax. In 2016, the American Beverage Association sued in an attempt to block the city’s soda tax and has also emphasized a toll it takes on workers. The American Beverage Association also worked to thwart beverage taxes in California and funneled $604,000 into anti-soda tax advertisements in Philadelphia.

Roberto adds that studies like hers help to cut through the politicking that surrounds the soda tax. There’s rigorous evidence, she says, that soda taxes work to curb sales.

“This policy, our result suggests, is one of the most effective ways to reduce purchases of these unhealthy drinks,” she says. “From a public health perspective, it would be great if we had a country-level tax on sweetened foods and beverages, because we’ve been losing the war for decades on chronic diseases in this country.”

Crucially, there are some important things to learn from Philly’s soda tax. Philadelphia’s takes aim at a wider variety of sweeteners, both natural and artificial, which makes it different from Berkeley’s soda tax — which focused only on caloric, sugar-sweetened beverages. Philadelphia’s tax affects any beverage with caloric sweeteners like sucrose, glucose, or high fructose corn syrup, as well as non-caloric sweeteners such as stevia, aspartame, sucralose, neotame, acesulfame potassium (Ace-K), saccharin, and advantame.

Still, there are caveats. One issue facing this study is that while it shows a clear reductions in sales, it can’t guarantee that people are actually drinking fewer sweet beverages. Sales are highly correlated with reduced consumption, Roberto adds, but we can’t know for sure that people aren’t substituting their soda-fix with some equally sweet substance.

“We do not look at what people are putting into their mouths at the end of the day,” says Roberto.

But largely, given that the money from these taxes is supposed to support other city programs, like Pre-K expansion programs, she sees them as a net positive for the city, not simply a punitive measure against soda-drinkers.

“When I sit back, I see this as a policy that’s a win-win. It’s well on its way to accomplishing its primary goal, which is supporting education programs in the city for kids,” she adds. “Then we have this great side benefit of reducing purchases of these unhealthy drinks.”

Partial Abstract:

Design, Setting, Participants: This study used a difference-in-differences approach and analyzed sales data to compare changes between January 1, 2016, before the tax, and December 31, 2017, after the tax. Differences by store type, beverage sweetener status, and beverage size were examined. The commercial retailer sales data included large chain store sales in Philadelphia, Baltimore, and the Pennsylvania zip codes bordering Philadelphia. These data reflect approximately 25% of the ounces of taxed beverages sold in Philadelphia

Exposures: Philadelphia’s tax on sugar-sweetened and artificially sweetened beverages.

Main Outcomes and Measures: Change in taxed beverage prices and volume sales.

Results: A total of 291 stores (54 supermarkets, 20 mass merchandisers, 217 pharmacies) were analyzed. In Philadelphia and Baltimore, the mean price per ounce of taxed beverages increased at all stores in the after-tax periods and taxed beverage volume sales per 4-week period decreased in all store types. Compared with Baltimore, Philadelphia experienced significantly greater increases in taxed beverage prices and significantly larger declines in volume of taxed beverages sold in the after-tax period.

Conclusion: In Philadelphia in 2017, the implementation of a beverage excise tax on sugar-sweetened and artificially sweetened beverages was associated with significantly higher beverage prices and a significant and substantial decline in volume of taxed beverages sold. This decrease in taxed beverage sales volume was partially offset by increases in volume of sales in bordering areas.