Boston researchers created a nationally representative microsimulation model to test three types of taxation on sugary drinks. One was a flat “volume tax” by drink volume, which is $0.01 per ounce. This is the only kind of tax U.S. cities have used so far. Another is a “tiered sugar content tax” by three levels of sugar content. It ranges from $0.00 for under 5 grams of added sugars per 8 ounces to $0.02 per ounce of added sugars for over 20 grams of added sugars per 8 ounces. The last one is a “fixed sugar content tax” by absolute sugar content, which is $0.01 per teaspoon of added sugars — the number of ounces notwithstanding.
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The simulation showed all three tax structures would create tax revenue, decrease the cost of health care and avert cardiovascular disease events and diabetes cases. The largest cost savings and health advantages were found in from tiered tax.
Researchers noted the tax designs could be worthwhile public health policy tools that could lead to a decrease in the consumption of sugary drinks and end up improving overall health and well-being.
By the numbers, researchers found a volume-based tax could avert 850,000 cardiovascular (CVD) events and prevent 269,000 cases of diabetes; a tiered tax could avert 1.67 million (CVD) events and stop 531,000 diabetes cases; an absolute tax could prevent 1.8 million CVD events and halt 550,000 diabetes cases.
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A volume-based tax simulation was found to generate the most federal tax revenue at $80.4 billion in federal tax revenue and an absolute tax simulation could gain 5 million quality-adjusted life years across the population and save $105 billion in net health care costs. Those same savings were reflected by the tiered tax simulation.
“Overwhelming evidence confirms that food prices have a big impact on purchasing decisions. Taxing sugary drinks influences consumer choices, reducing consumption,” Yujin Lee, Ph.D., a postdoctoral fellow of the Friedman School of Nutrition Science and Policy at Tufts University in Boston and the co-lead study author said in a press release. “U.S. cities have introduced volume taxes on sugary drinks. But our findings suggest that a tiered fixed sugar content tax would be best, reducing consumer intakes while also encouraging manufacturer reformulations to reduce the sugar content of their products.”