Taxing Sugary Drinks

Roberta R. Friedman, ScMYale University

Today

Conceptual scheme Why tax SSBs? Industry response Will the US pass a tax?

www.YaleRuddCenter.org

PUBLIC POLICY ECONOMICSFOOD MARKETING

WEIGHT STIGMA SCHOOLSLEGAL

COMMUNICATIONS

DIRECTORKELLY BROWNELL

The Rudd Center

Dep. DIRECTORMarlene Schwartz

AJPH, 2000

AJPH, 2010

Prev. Medicine, 2011

Rudd Papers: Taxes

Brownell, Frieden. Public policy case for taxes. NEJM, 2009

Brownell et al. Public health and economic benefits of taxing SSBs. NEJM, 2009

Rudd Papers: SSBs

SSBs and health– Effects of soft drink consumption on

nutrition and health (AJPH, ‘07)

Other– Perils of ignoring history: Big tobacco

played dirty and millions died. How similar is big food? (Milbank Quarterly, ‘09)

A Conceptual Scheme

Create “Optimal Nutrition Defaults”

Current Nutrition Defaults

16 oz 32 oz 44 oz 52 oz 64 oz

48 Teaspoons Sugar

Portion Sizes

Too Much Access

Too Little Access

Marketing

AT&T Park, San Francisco Giants’ Stadium

Current Public Health Efforts

The Individual

Educate Knowledge

MedicateOperate

Implore/Embarrass

Motivation

LessObesity?

Creating Optimal Nutrition Defaults

The Individual

EconomicsLegislation

Optimal Defaults

RegulationEnvironment

LessObesity?

Why Focus on Sugary Drinks?

Definition

Single Greatest Source of Added Sugar

Sources of added sugars in US diet, ages 2+, 2005-06

Source: Dietary Guidelines for Americans, 2010

Added Sugar

Average US intake = 45 gallons/yr(170 litres)

Average US child = 193 calories/day

Andreyeva, 2011; Smith, 2010

US Children ages 2-19

Smith, ERS, 2010

Why: Solid Science

Diet Quality Weight gain/obes Type 2 diabetes

Cardiovascular disease

Dental caries Osteoporosis Gout

A Mechanism

Sugar in liquid form less filling than in solid

We don’t compensate for extra liquid calories by eating fewer calories from solid food

Mourao, IJO, 2007; DeCastro Physio Behav, 1993; Harnack, JADA 1999

Calls for Reduction,Price Increases: Canada

Health Canada Heart and Stroke Foundation Chronic Disease Prevention Alliance of

Canada Childhood Obesity Foundation Québec Coalition on Weight-Related

Problems (>150 partners)

Calls for Reduction,Price Increases: US, Int’l

CDC USDA Institutes of Medicine American Academy of Pediatrics American Heart Association

World Health Organization

Why: Empty Calories

250 calories

Why: Gratuitous Addition of Caffeine

Coupled with calories Added to unlikely foods/beverages

– E.g. soda, water, potato chips, jelly beans Supposed taste enhancer Effects: reinforcement, tolerance,

withdrawal

Brownell, Griffiths, & Gold 2008; Keast & Riddell 2007; Griffiths & Vernotica, 2000

RWJF Healthy Eating Research Brief and FTC, 2008

Why: Marketing (youth)

Websites Text messagesEmail Facebook

1955

Coke’s CEO

“We are laser-focused on targeting the right consumers ….To target aging and affluent consumers globally, we are actively exploring new ingredients, new functionality and new occasions. At the same time, we are creating new strategies that are winning over a massive new generation of teens to drive growth of Trademark Coca-Cola.”

Businesswire.com, November 16, 2009

Why Sugary Drinks?

Single greatest source of added sugar Solid scientific proof of harm Completely empty calories Poor calorie compensation Gratuitous addition of caffeine Relentless marketing

An Excise Tax on SSBs

Rationale

Gov’t role to protect citizens if “market failures”– Information deficits: education vs. ads– Immediate gratification vs. future

consequences (esp.children)– Consumers/producers don’t bear full cost

of consumption decisions

Goals

Raise money for obesity prevention

Reduce consumption

Proposal

Penny per ounce– Any beverage w. added sugaror

Penny per teaspoon added sugar– Incentive to reduce sugar

Revenue for obesity prevention

Impact of price changes

10% price increase = 10-12.6% consumption decrease

Penny per oz = approx 20% increase

Smith, 2010; Andreyeva, 2010

Smith, USDA, 2010

Effect on obesity?A 20% price increase in SSBs would decrease:

• Adult calories by 37 per day

• Adult weight by 3.8 lbs /yr (1.7kg)

• Children’s calories by 43 per day

• Adult overweight prevalence by 4.5%

• Child at risk prevalence by 5.3%

Even Larger Effect?

Couple with–Consumer education –Subsidies of fruits/vegetables

Smith, 2010; Chaloupka, 2010; Faulkner, 2010

Why Excise?

Impose on bottler, mfr., distrib. Increases shelf price Includes syrups

Why Not Sales?

No shelf price increase % of product’s price

– Buy larger containers? Misses syrups

Pass the tax on

“A distributor shall add the amount of taxes levied by this act to the price of sugar-sweetened beverages sold to a retailer, and the retailer shall pass the amount of the tax through to a consumer as a component of the final purchase price.”

Industry Response and

Strategies

Industry Defense

It’s about physical activity

The science isn’t clear

It won’t solve obesity

Many things drive obesity

Consumption is down, obesity is up

People will lose jobs

Sugar isn’t so important

False

False

True

True

False

???

False

Use Professional Organizations

American Dietetic Association–Dietitians testify

• No good or bad foods • Personal responsibility• Unfair to target any food/beverage

Industry Response:Re-direct the Focus

Personal responsibility as cause Gov’t action usurps personal freedom Nanny state, “food police”

Front Groups

Americans Against Food Taxes

http://youtu.be/hWi7JI55G-c

Clear on Calories

American Academy ofFamily Physicians

“Health Information for the Whole Family”

Children’s Hospital of Philadelphia

Coke Live Positively

Pepsi Refresh

Freedom of Information Requests

Philadelphia New York City Seattle Centers for Disease Control

Challenge to CDC Grants“…we believe that some of the direction given to states and communities in developing their grant proposals unfairly singles out the soft drink industry for punishment in the form of negative advertising and the imposition of special taxes to discourage consumption.”

Will the US pass a tax?

Context

Budget deficits “No new taxes”State House/Senate majorities

And yet….

Other Legislation

Eliminate sales exemptions or impose sales tax (9 states)

“Swap” legislation: penny per oz for 1% reduction in sales tax (1 state)

SNAP food stamps: (6 states)

Public Support

Greater if funds go to child obesity prevention

New US Initiatives

CDC

Boston Procurement Policy

Hospital Bans

Cleveland Clinic, OH Carney Hospital, Boston MA Fairview Hospital, Gt. Barrington MA

Rudd Center Resources

www.yaleruddcenter.org/ssbtax

Issue Overview and Fact Sheets Tax Information Revenue Calculator Legislation Public Opinion Data Studies Supporting Statements of National Organizations Media Coverage Additional Resources

Thank you! Merci!

Roberta FriedmanRoberta.friedman@yale.edu

www.yaleruddcenter.org