Soda Taxes: Effective or Not?

In 2017, Cook County, Illinois decided to do something to hopefully make its residents a little healthier. It implemented a “soda tax” for four months. This tax applied to any drink sweetened with sugar or artificially sweetened and was set at a penny per ounce, all in the hopes that it would sway consumers to make healthier choices. The amazing thing is that, according to sales data, the tax worked! Soda sales decreased by a whopping 21% during the taxation period.  

A study conducted by the University of Illinois looked more closely at these results and what they might say about local government's ability to protect its people against unhealthy lifestyles and choices.  

For accurate tracking, the study looked at the quantity of drinks purchased before and after the now-repealed tax and also compared the taxation purchases to the number of purchases made at the same time last year. What it found was a major decrease in the purchase of taxed beverages and no real change in the purchase of untaxed beverages, which indicates that the reduced sales were likely directly tied to a tax avoidance strategy and that at least some people may have turned to ordering their drinks of choice online. Also of note is the fact that large-volume purchases, such as cases of sugary drinks, were affected more than smaller purchases where the tax was likely not as noticeable.

So, while these results aren’t perfect and don’t indicate that everyone immediately stopped drinking soda due to taxation, they do show that a soda tax can help to reduce people’s consumption of bad-for-them-beverages and, by extension, improve their overall health.

Perhaps, with data like this on the table, more counties and even states may adopt a similar tax! While only time will tell whether or not this type of taxation will become a trend, you can prepare yourself by ditching bad habits that might affect your wallet if a tax were to come into play. Your body and your wallet will thank you for it!