Can 'Sin Taxes' Solve America's Obesity Problem?
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It seems like a simple solution: To curb the obesity problem, make unhealthy foods more expensive and people will eat less of them.
Local governments around the country—including Philadelphia, San Francisco, Seattle, and Berkeley, Calif., among others—have started to do just that, enacting laws that tax sugar-sweetened drinks and sodas at a higher rate than other foods and beverages.
Sugary drinks are a logical choice. They’re a major contributor to daily American calorie intake—roughly 7 percent of all calories consumed—while contributing little to no nutritional value. Consider that an average 20-ounce cola harbors about 16 teaspoons of added sugar.
These so-called behavior or sin taxes are among the newest weapons being deployed in the complex war to end America’s obesity crisis. The U.S. currently holds the unenviable title of most overweight nation on earth, with more than a third of citizens now considered obese.
While a long-term fix to the nation’s weight-gain epidemic will require much more than just taxation, an in-depth look at early experiments shows promising results—particularly when taxes are targeted at soda and other sugar-heavy drinks.
“Taxation of sugary beverages and junk food is where we have the most solid evidence of an effect,” says Barry Popkin, Ph.D., an economist and professor of nutrition at the University of North Carolina at Chapel Hill. “Overall, it reduces consumption, and particularly for lower-income people, who have a higher incidence of untreated diseases, such as hypertension, diabetes, and other chronic diseases related to excessive consumption of these foods."
Why Focus on Soda?
Seemingly small increases in calories through the years have contributed to America’s current obesity epidemic, which suggests that relatively small adjustments could go a long way toward alleviating it.
The weight gain among Americans stems from what has been estimated to be an increase of roughly 300 calories a day over time, notes Philadelphia Health Commissioner Thomas Farley, M.D. “Take away one can of soda, which would be about 150 calories, and you’re halfway there to offsetting that,” he says.
To work well, he says, these efforts need to zero in on two groups—the young and the heaviest soda consumers. Those who are overweight in childhood tend to be overweight as adults, he explains.
And Popkin of UNC-Chapel Hill notes that while the average American consumes 150 calories from soda a day, 40 percent of the population consumes 300 to 800. “That’s the group we really want to focus on,” he says.
Not surprisingly, the soda industry opposes beverage taxes, and in recent years has tried to defeat city ballot initiatives to enact taxes, and when new laws do pass, challenge them in court.
Industry representatives note that while the rate of obesity has been rising in recent decades, overall consumption of sugary drinks in the U.S. has declined by about 27 percent since 1998—mainly as bottled water has become an increasingly popular alternative. (Learn more about the benefits of water.)
What We Learned From Cigarettes
Nearly everyone can agree on this: The long and robust campaign against tobacco use in the United States set the gold standard for a successful government health initiative. The winning formula involved a combination of bold strategies, including high taxation, public education on the dangers of cigarette use, limits on advertising, and a long, grinding battle to restrict where tobacco can be sold and used.
And the results have been striking: Since 1965 the smoking rate among American adults has dropped from roughly 42 percent to 15 percent in 2015.
To get there, the financial disincentives for using tobacco have become extraordinarily high—in some places, such as New York City, taxes now add up to more than $5, or about half the cost of a pack of cigarettes.
No less significant, though, is that starting in 1971 the tobacco industry grudgingly accepted tough restrictions and bans on advertising in an effort to head off even more draconian measures.
Devising ways to combat obesity, experts say, ultimately will require the same kind of enduring dedication and aggressive game plan used on tobacco.
The Carrot-and-Stick Approach
The World Health Organization recommends a multipronged strategy that is part punishment, part reward—leveraging both consumer taxes and marketplace subsidies. It suggests subsidizing the cost of fruits and vegetables by 10 to 30 percent while at the same time taxing foods and beverages high in saturated fat, trans fat, added sugars, and sodium. Bad-behavior levies would in effect pay to encourage better behaviors.
The public will buy into these taxes, the WHO suggests, “if the revenue they generate is earmarked for efforts to improve health systems, encourage healthier diets and increase physical activity.”
Results from CR’s survey also suggest consumers would support that idea, with a large majority saying they’d respond favorably to the "carrot" encouragement approach: While half of Americans say they would not cut back on unhealthy food if it cost more, most (73 percent) say they would eat more healthy food if it cost less.
“It’s not acceptable to a lot of people to have their behavior controlled,” says Ajibade Animasaun, a 63-year-old cab driver, in a recent interview in Philadelphia, where a 1.5-cents-per-ounce soda tax went into effect at the start of this year. “Yeah, you can tell me you are going to help me with my obesity problem,” Animasaun says, rhetorically, “but not by taxing me to death.”
While people say that they prefer subsidies to punishments, in many cases taxes have been found to work better. Research shows that while a 20 percent tax generally reduces unhealthy behavior by 20 percent, a 20 percent subsidy improves healthy behavior by only 10 percent.
Programs that encourage healthy changes are much less prevalent than those that tax unhealthy habits.
In 2014, Congress earmarked $100 million for a program that would increase the value of Supplemental Nutrition Assistance Program (SNAP) benefits—what used to be called food stamps—when they are used to buy fruits and vegetables. The U.S. Department of Agriculture, which added $16.7 million in funding last Fall, characterizes it as a success.
And a recent survey of SNAP shoppers at seven farmers markets in the program found that 74 to 94 percent of them had increased either their purchase or consumption of fruits and vegetables. It is not clear whether Congress or the Trump administration will renew the program when it ends in 2018.
While applauding the intent, Popkin worries that such initiatives don't address the overwhelming prevalence of junk food in the American marketplace, particularly in the diets of children and adolescents. “Going from two to three servings of fruits and vegetables to three-and-a-half servings doesn’t do a lot,” he says, “when you’re also consuming a lot of chips and soft drinks and other junk food."
Why Consumer Choice Matters
These kinds of behavior taxes and consumer educational efforts have been around for decades and tried, with mixed results, on everything including cigarettes, alcohol, gasoline, fatty foods, and garbage—the latter to encourage recycling.
For example, Denmark tried to tax foods high in saturated fat several years back, but noticed its citizens were simply crossing national borders to load up on their Danish pastry and other gooey delights. So the tax was removed.
And in 2008, New York City rolled out a nutritional content program requiring calorie counts to be posted on menus at fast-food and large chain restaurants. But researchers found that this public awareness effort did almost nothing to steer customers toward healthier alternatives.
In Philadelphia, there was little public support for a soda tax until city officials promised that its millions in projected revenue would go toward funding pre-kindergarten programs.
Lessons From Abroad
Chile has launched what is probably the most ambitious program anywhere. And with reason, given that more than 10 percent of the country’s children under the age of 5 are considered obese.
Its government went well beyond the 18 percent sugar-sweetened-beverage tax already in place on drinks containing a high percentage of sugar. Packaging for products that exceed the limit must bear a prominent health warning label, and Chile now prohibits all forms of advertising for those products aimed at children under 14.
Mexico, one of the highest in prevalence of diabetes among industrialized nations, has instituted a similar program, and it is working. The country’s 1-peso-per-liter tax on sodas, roughly 10 percent of the overall cost, resulted in a 6 percent decrease in overall sales and a drop of nearly 12 percent among lower-income citizens.
Popkin of UNC-Chapel Hill has been advising Mexico on its robust campaign. He is hopeful that more progress can be made in the U.S., starting with beverage taxes. But to date, they are only being adopted piecemeal by more health-conscious communities, and the federal government has yet to take steps toward a national tax.
He has no illusions about achieving a quick fix without a multifaceted strategy and more buy-in from Americans. Despite government-sponsored education to encourage healthy eating, nationally the rate of diabetes and other chronic diseases has continued to climb and obesity levels have yet to decline. One-third of American children are overweight or obese as determined by body mass index.
“We’ll be the last country that will be dealing with obesity in a significant way,” Popkin says.
— Catherine Roberts and Thomas Germain contributed reporting.
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