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A new study released Tuesday is turning out to prove that the extremely unpopular tax on Philadelphia soft drinks is actually a big hit.
Implemented in January 2017, the Philadelphia tax on sweetened beverages rises to 1.5 cents per ounce. Policy advocates are calling for a wide range of benefits, including the reduction of obesity and the promotion of healthy lifestyles. Mayor Jim Kenney also hopes the tax will generate regular revenue to fund pre-kindergarten education. So, what are the results?
According to the study published in JAMA, sales of taxed beverages fell by 51% between January 1, 2016 and December 31, 2017. The surge in cross-border shopping offset 24.4% of this decline, which led to a drop in 38% of total sales. The JAMA study differs considerably from the previous Stanford Business School working paper, which showed a more modest decline in sales of 22%. Both studies showed little evidence of people opting for untaxed drinks such as water.
It should not be surprising that soft drink sales fall after a huge tax increase, although this is not always the case. But this relatively innocuous discovery is considered a great victory for a bold public health policy. This is a strange conclusion to reach since the study contains "no data on drink consumption or obesity rate".
The Stanford paper, however, examines consumption and may "fail to detect a significant reduction in caloric and sugar intake".
Thus, instead of claiming any progress in health, the fact that there has been a decline in sales of sodas is considered a success. "Taxing sweetened beverages is one of the most effective strategies to reduce the purchase of these unhealthy beverages," said Christina Roberto, who led the research.
The editorial accompanying the study admits that it provides no evidence that the tax produces health benefits, but states that "the current evidence is already sufficient to allow the adoption of taxes while continuing to monitor the results" .
When you define the success of soft drink taxes as a reduction in soft drink sales, you set the bar so low that you can stumble on it.
We have been told many times that reducing sales of soda would reduce childhood obesity, prevent deaths, diabetes, dental caries, and lead to substantial savings in health care. So, before the poles are completely removed from the field, it should be remembered that never and nowhere have these predictions come true.
In 2018, the New Zealand Institute of Economic Research released a report examining 47 studies on sugar taxes. "We have not been able to find evidence that a sugar tax actually implemented worldwide would have helped improve health," said one of the authors of l & # 39; study.
On the revenue side, the Philadelphia soft drink tax was 15% lower than the first year's forecast, raising $ 79 million from the expected $ 90 million.
So what's the tax on soft drinks got outside of chasing businesses in the city? According to the Stanford newspaper, the sharpest declines in the consumption of sweetened beverages are among the richest households and the least likely to be obese. The burden of the tax has weighed the heaviest on the poorest consumers, who are also the most likely to be obese, the least likely to reduce their consumption of sodas and those who are the least able to. avoid the tax.
The arguments in favor of these taxes are now so weak that the demonstration of a basic law in economics is considered sufficient reason to extend them to the rest of the country. By mistakenly associating any decline in consumption with better health outcomes, activists are relieved of the burden of proving that taxes on sodas reduce obesity.
The health benefits of soda taxes remain notional, only in the heroically optimistic models of researchers and activists involved in making a monster out of sugary drinks. In the real world, it is the poorest consumers in places like Philadelphia who bear the brunt of these taxes without any benefit.
Guy Bentley (@gbentley1) is a contributor to the Washington Examiner Beltway Confidential Blog. He is director of consumer freedom at the Reason Foundation.
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