August 30, 2016
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First sugar-sweetened beverage tax in US decreases soda consumption

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The 1-cent-per-ounce excise tax on sugar-sweetened beverages implemented in Berkeley, California, has resulted in reduced regular soda consumption and increased water consumption among low-income residents, according to data published in the American Journal of Public Health.

In November 2014, Berkeley became the first municipality in the United States to pass an SSB excise tax on sugary beverages including soda, energy and sports drinks, fruit-flavored drinks, sweetened water, coffee and tea. Syrups used to make SSBs were also included. Non-SSBs, such as diet soda, are not taxed. The SSB excise tax was implemented in March 2015.

“Reducing sugar-sweetened beverage (SSB) consumption has become a public health priority because of strong evidence that SSBs increase the risk of obesity, diabetes, heart disease and dental caries,” Jennifer Falbe, ScD, MPH, of the University of California, Berkeley School of Public Health, and colleagues wrote. “… Most U.S. states have sales taxes on SSBs; however, they are typically too low to have a meaningful impact on consumption, are applicable to both SSBs and non-SSBs, and are added at the register — after a consumer has decided to purchase an SSB. Excise taxes, however, are expected to have greater saliency for consumers because they translate into higher shelf prices, which consumer see before deciding what to purchase.”

Since then, Philadelphia in June 2016 became the first major city in the United States to approve an SSB tax, introducing a 1.5-cent-per-ounce levy on sugary drinks effective Jan. 1, 2017. The city intends to use the tax to fund early childhood education. Mexico and France both collect excise taxes on SSBs at a national level.

To analyze the impact of Berkeley’s SSB tax on local consumption, the researchers used a repeated, cross-sectional design to study behaviors before and after implementation in the municipality’s low-income neighborhoods, and compared them to those in nearby communities in Oakland and San Francisco. Interviewers administered questionnaires to 990 participants before implementation, and 1,689 participants approximately 4 months after the tax went into effect.

According to the researchers, following implementation, the adjusted consumption of SSBs in Berkeley decreased 21%, compared with an increase of 4% in the comparison cities (P = .046). Regular soda consumption decreased 26% in Berkeley, but increased 10% in the comparison cities (P = .05). Berkeley additionally reported a 36% drop in the consumption of sports drinks, while the comparison communities saw a 21% increase (P = .02). Meanwhile, water consumption in Berkeley increased by 63%, compared with an increase of 19% in the comparison cities.

“As SSB excise tax is one of the few public health interventions expected to reduce health disparities, save more money than it costs, and generate substantial revenues for public health programs,” Falbe and colleagues wrote. “Already, Berkeley City Council has allocated $1.5 million to fund programs to reduce SSB consumption and address obesity for the 2016-2017 fiscal year. In addition, a recent modeling study found that a national SSB tax resulting in a reduction in consumption on par with what we observed would result in lower child and adult [BMI] and avert 101,000 disability-adjusted life-years over a decade.”

The American Beverage Association (ABA), a trade group that represents the non-alcoholic beverage industry, has criticized the study, releasing an analysis calling into question its water consumption figures and noting its various overall limitations. The analysis was prepared by Brad Williams, an economist and partner at Capitol Matrix Consulting, who provides consulting services for the ABA.

Reached via email, a spokeswoman for the ABA issued the following statement on the Berkeley study:

“The authors of this street survey acknowledge that it had a number of flaws and there is no indication that the tax had or will have a measurable impact on public health. In fact, it is well-established that taxes on common grocery items do not improve public health. America's beverage companies are committed to being part of real solutions to public health challenges on a national scale through the Balance Calories Initiative, which aims to reduce beverage calories in the American diet by 20% by 2025 through innovation, reformulation and smaller package sizes.” – by Jason Laday

Disclosure: Falbe reports receiving support in the form of a post-doctoral fellowship from the American Heart Association.