![]() ![]() Many recently proposed and implemented soda taxes are at the local and municipality levels, with seven cities currently having soda taxes.10 In 2019, California, Connecticut, Massachusetts, New York, Rhode Island, and Vermont initiated soda tax proposals but none passed. There is no federal soda tax in the U.S., and based on state experiences and recent polls, it is highly unlikely there will be one in the near future. For example, Arkansas dedicates the tax revenue to fund its Medicaid program, Virginia funds litter control and recycling programs, and West Virginia uses the revenue for the medical school at West Virginia University. The vintage soda taxes in Alabama (licensing) and Tennessee (gross receipts tax) are levies on the privilege of working or conducting business in the state, whereas other vintage soda taxes focus on revenue collection and financing specific public programs instead of curbing consumption and changing consumer behaviors. These states impose soda taxes in the form of licensing charges, gross-receipts taxes, or excise taxes. In addition, sales tax on soda is based on the retail price of a drink, whereas excise tax is usually based on the volume of sugar added or the size of a soda container.Ī few states, including Alabama, Arkansas, Tennessee, Virginia, Washington, and West Virginia, have “vintage” soda taxes that were established decades ago. As a result, consumers may not bear the full burden of the tax. In contrast, although excise tax is usually imposed on distributors of sugary beverages, who can pass the price increase on to retailers and consumers, they may choose to absorb part of it. ![]() ![]() First, although retailers collect and remit sales tax, customers typically bear the financial burden of it. Due to the nature of such activities, supporters of excise taxes on cigarettes, alcoholic beverages, and soda often call them “sin taxes.” Because the ultimate goal is to improve health outcomes, recent soda taxes usually prioritize consumption reduction over revenue generation.īesides the narrowly targeted tax base, excise tax on sugary drinks differs from sales tax in several major ways. Common excise tax examples include levies on cigarettes, alcoholic beverages, soda, gas, lottery, and amusement activities. Broadly speaking, excise taxes single out a particular good or activity to either generate revenue or deter consumption through increased prices. 8 The soda tax debate over the last decade centers on imposing excise taxes on sugary drinks. Sales Tax and "Vintage" Soda Taxesīefore reviewing the current soda tax debate, it is important to remember that soda is subject to sales tax at general or reduced rates in 35 states. This leads researchers to believe the association of sugary drink consumption and weight gain is stronger than for any other types of food or beverage, 7 which provides the foundation for soda taxes. 6 Multiple publications indicate sugary drinks are the largest single source of added sugars in today’s diet, accounting for half of Americans’ added sugar consumption. ![]() 5 Since the 1970s, successful marketing, lower prices, increased portion sizes, and greater availability have contributed to increased consumption of these beverages. The study also points out an alarming trend for highly educated males in the U.S.: although women and less educated people have the highest rates of obesity, male obesity, especially among the highly educated, has been the most rapidly growing of all demographic groups.īesides these disconcerting statistics, numerous studies link several common forms of noncommunicable diseases, including weight gain, obesity, type two diabetes, and heart disease, to the increased intake of sugary drinks. 4 These statistics are projected to be 47% in the U.S. and Mexico have the highest obesity rates for people 15 years and older, at 38% and 30% respectively. 3 Health Statistics and Soda Consumption TrendsĪn Organisation for Economic Co-operation and Development (OECD) study shows that among 44 countries surveyed in 2015, the U.S. This report reviews the controversies of taxing sugary drinks describes recent global, state, and local experiences of developing and implementing soda taxes and provides practical policy considerations. 2 Not surprisingly, a soda tax does not sit well with industry groups including the American Beverage Association (ABA), which adamantly opposes such taxes. 1 Although everyone has their own secrets to longevity, Buffet’s dietary choice is not embraced by the American Heart Association (AHA), which considers obesity and heart diseases caused by soda to be so devastating that it recommends taxing sugary drinks to reduce consumption. Warren Buffet once told the media that his secret of staying young and healthy is to drink five cans of Coca-Cola every day. ![]()
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