Massachusetts' Proposed Tax on Sweets May Not Dampen Demand
BOSTON -- When Massachusetts Gov. Deval Patrick proposed a 5 percent premium on sugary treats last week, his administration called it a sin tax with a bonus: The levy, a briefing paper stated, would be "a critical first step in discouraging the consumption of these empty calories," according to a report in the Boston Globe.
But there is little evidence that an extra nickel or dime for a candy bar would significantly dampen demand for products blamed for fueling the nation's obesity epidemic, the newspaper reported.
Chicago researchers who studied the effects of state tax policies on consumer behavior concluded that modest fees on candy and soft drinks produce equally modest effects on waistlines and consumption. "If the state's purpose of a 5 percent tax is to drive down the obesity rate, then that's an overstatement of what it's likely to do," Frank Chaloupka, director of the Institute for Health Research and Policy at the University of Illinois at Chicago, told the Boston Globe. "The bottom line is that the taxes are really too low to significantly affect obesity."
States big and small, from California to Rhode Island, tack a surcharge onto soft drinks and candy. In all, 33 states have sales taxes on soda or candy as of Jan. 1, 2008, with most rates hovering between 4 and 6 percent, according to the report.
John Auerbach, the Massachusetts public health commissioner, acknowledged in an interview that the main objective of the sugar tax is revenue generation, not behavior modification. The $43.5 million the state expects to collect annually from taxes on candy and soft drinks -- both regular and diet varieties -- would go to a fund for public health services, including community health centers, dental care, and violence prevention.
"I think it is possible that it will affect consumption," Auerbach said. "But when we've looked at past studies, it is difficult to document that."
Public health authorities hail cigarette taxes as an example of how boosting prices can curb consumption. But, they concede, there is a big difference between a state tax of $2 or more for a pack of cigarettes -- most Northeastern states, including Massachusetts, impose at least that much -- and a few pennies for a snack.
"There's no question that raising taxes on tobacco changes behavior, particularly for children because children are very price-sensitive," said Dr. Georges Benjamin, executive director of the American Public Health Association, the nation's largest group of public health specialists, told the newspaper. "But I don't know if 5 [percent] is going to make a difference in whether someone is going to buy a Coca-Cola or Pepsi."
An experiment by a Harvard School of Public Health researcher suggests that boosting soda prices can tamp down demand, if the increase is steep enough, the newspaper reported.
Last spring, Dr. Jason Block arranged for a temporary 35-percent price increase in regular soft drinks sold in the Brigham and Women's Hospital cafeteria. The result: Sales of those drinks plummeted 20 percent, while diet drinks, which weren't subject to the price change, became more popular.
"To me, soft drinks are kind of like the cigarettes of the food world," Block said. "Most people don't think soft drinks are healthy. They just like them."
Soft drinks have been identified by researchers as one likely culprit in the nation's surge of overweight and obese adults and children. A 2004 study by Boston scientists, for example, found that women who drank at least one sugar-laden soda every day gained significantly more weight and were substantially more likely to develop diabetes than women who didn't, according to the newspaper.
Even in Massachusetts, a state recognized as being among the healthiest in the nation, nearly three of every five adults weigh too much, and one-third of middle school and high school students are overweight, the report stated.
"So I actually think a tax on these sugar-sweetened beverages would be very reasonable," said an author of the 2004 study, Dr. JoAnn E. Manson, chief of the Division of Preventive Medicine at the Brigham.
The Patrick administration capped its proposed levy at 5 percent in the hope that it would prove palatable to tax-averse legislators, Auerbach said. Public-health authorities do not believe the health threat posed by candy and soft drinks rises to the level of cigarettes, which Massachusetts taxes at $2.51 a pack.
Some specialists argued that even a modest tax on sweets could reduce consumption and, in turn, yield health benefits, according to the newspaper report. Dr. David Ludwig, director of the Optimal Weight for Life Program at Children's Hospital Boston, said that could be especially true as the country slogs through a recession; consumers are already pinching pennies, so adding a few more to the price of a soft drink might be enough to deter impulse purchases.
Others who have studied food sales taxes are more dubious. Jamie Chriqui, a senior research scientist at the University of Illinois at Chicago health institute, told the newspaper that unlike cigarette excise taxes, which are usually included in the posted price, sales taxes on candy and sodas aren't rung up until consumers reach the register, after the decision to buy has been made.
CSNews Senior Editor Barb Grondin Francella speaks out on the potential impact this sin tax could have on c-stores. To read her thoughts or share your own, click here.
But there is little evidence that an extra nickel or dime for a candy bar would significantly dampen demand for products blamed for fueling the nation's obesity epidemic, the newspaper reported.
Chicago researchers who studied the effects of state tax policies on consumer behavior concluded that modest fees on candy and soft drinks produce equally modest effects on waistlines and consumption. "If the state's purpose of a 5 percent tax is to drive down the obesity rate, then that's an overstatement of what it's likely to do," Frank Chaloupka, director of the Institute for Health Research and Policy at the University of Illinois at Chicago, told the Boston Globe. "The bottom line is that the taxes are really too low to significantly affect obesity."
States big and small, from California to Rhode Island, tack a surcharge onto soft drinks and candy. In all, 33 states have sales taxes on soda or candy as of Jan. 1, 2008, with most rates hovering between 4 and 6 percent, according to the report.
John Auerbach, the Massachusetts public health commissioner, acknowledged in an interview that the main objective of the sugar tax is revenue generation, not behavior modification. The $43.5 million the state expects to collect annually from taxes on candy and soft drinks -- both regular and diet varieties -- would go to a fund for public health services, including community health centers, dental care, and violence prevention.
"I think it is possible that it will affect consumption," Auerbach said. "But when we've looked at past studies, it is difficult to document that."
Public health authorities hail cigarette taxes as an example of how boosting prices can curb consumption. But, they concede, there is a big difference between a state tax of $2 or more for a pack of cigarettes -- most Northeastern states, including Massachusetts, impose at least that much -- and a few pennies for a snack.
"There's no question that raising taxes on tobacco changes behavior, particularly for children because children are very price-sensitive," said Dr. Georges Benjamin, executive director of the American Public Health Association, the nation's largest group of public health specialists, told the newspaper. "But I don't know if 5 [percent] is going to make a difference in whether someone is going to buy a Coca-Cola or Pepsi."
An experiment by a Harvard School of Public Health researcher suggests that boosting soda prices can tamp down demand, if the increase is steep enough, the newspaper reported.
Last spring, Dr. Jason Block arranged for a temporary 35-percent price increase in regular soft drinks sold in the Brigham and Women's Hospital cafeteria. The result: Sales of those drinks plummeted 20 percent, while diet drinks, which weren't subject to the price change, became more popular.
"To me, soft drinks are kind of like the cigarettes of the food world," Block said. "Most people don't think soft drinks are healthy. They just like them."
Soft drinks have been identified by researchers as one likely culprit in the nation's surge of overweight and obese adults and children. A 2004 study by Boston scientists, for example, found that women who drank at least one sugar-laden soda every day gained significantly more weight and were substantially more likely to develop diabetes than women who didn't, according to the newspaper.
Even in Massachusetts, a state recognized as being among the healthiest in the nation, nearly three of every five adults weigh too much, and one-third of middle school and high school students are overweight, the report stated.
"So I actually think a tax on these sugar-sweetened beverages would be very reasonable," said an author of the 2004 study, Dr. JoAnn E. Manson, chief of the Division of Preventive Medicine at the Brigham.
The Patrick administration capped its proposed levy at 5 percent in the hope that it would prove palatable to tax-averse legislators, Auerbach said. Public-health authorities do not believe the health threat posed by candy and soft drinks rises to the level of cigarettes, which Massachusetts taxes at $2.51 a pack.
Some specialists argued that even a modest tax on sweets could reduce consumption and, in turn, yield health benefits, according to the newspaper report. Dr. David Ludwig, director of the Optimal Weight for Life Program at Children's Hospital Boston, said that could be especially true as the country slogs through a recession; consumers are already pinching pennies, so adding a few more to the price of a soft drink might be enough to deter impulse purchases.
Others who have studied food sales taxes are more dubious. Jamie Chriqui, a senior research scientist at the University of Illinois at Chicago health institute, told the newspaper that unlike cigarette excise taxes, which are usually included in the posted price, sales taxes on candy and sodas aren't rung up until consumers reach the register, after the decision to buy has been made.
CSNews Senior Editor Barb Grondin Francella speaks out on the potential impact this sin tax could have on c-stores. To read her thoughts or share your own, click here.