making a difference for dairy
Be Heard

Regulatory RoundUp

Get Involved

Advocacy: Dairy Counts

Join the Discussion

Dairy Forum

Dairy Delivers℠: The Economic Impact of Dairy Products
Advocacy: Dairy Counts
FDA Milk Safety Memoranda
Buyers' Guide
Member Hotlines
Dairy Market Prices
Quick Links

Dairy Facts 2016

USDA Studies Effect of Taxing Sugar-Sweetened Beverages

Jul 09, 2010

In an environment of increased intrusion by government in dictating decisions on food and beverage choices, the U.S. Department of Agriculture's Economic Research Service this week released study results showing the effect that a hypothetical tax on sweetened beverages would have on beverage consumption, calorie intake and obesity.

The findings indicated that a 20-percent tax on beverages sweetened with sugar or syrups would reduce consumer demand for the drinks and lower daily calorie intakes on average for both children and adults. The study also found that consumers looking for relatively lower-priced alternatives will consume more juice, bottled water and milk.

Study researchers predicted that adults could lose 3.8 pounds and children could lose 4.5 pounds in one year. These weight losses would particularly help those at risk of moving to the overweight or obese weight classification. The study analyzed purchases made for in-home consumption and did not include information on vending machines or restaurant sales.

An excise tax on the manufacturer would likely have the greatest impact on demand, the study showed, because the tax often would be reflected in the on-shelf price.

IDFA Opposes Taxing Food and Beverages to Influence Purchase Decisions

Despite some of these finding being seemingly positive for alternative beverages, such as milk, IDFA opposes taxing foods and beverages to influence purchase decisions.

"This would be nothing but a regressive tax on those with the least resources," said Connie Tipton, president and CEO of IDFA. "We don't think government should dictate food and beverage choices through taxation. If we go down this road, what foods are next? The entire food industry must stick together in opposing taxation of selected foods and beverages."

According to the ERS report, the popularity of "caloric sweetened" sodas and fruit drinks in American diets has increased at the expense of milk, especially since the late 1980s. ERS argues that current efforts for taxes are intended to reverse this trend, but the states' need for new resources is also driving them to try to implement beverage taxes.

"You may recall that Congress also considered a national sweetened beverage tax, which would have included flavored milks, arguing it would improve the American diet as well as help raise needed funds for their new health care bill," Tipton said.

The barrage of material that is being amassed in this drive to dictate diets is considerable. Last year the Institute of Medicine recommended that local governments implement a tax strategy for calorie-dense, nutrient-poor foods and beverages to discourage consumption. Earlier this year, the White House Task Force on Childhood Obesity recommended that federal, state and local governments analyze the effects of taxes on less healthy, energy-dense foods, such as sugar-sweetened beverages.

IDFA remains opposed to taxes on selected foods and beverages that are singled out with little or no scientific basis.

Read the full report, "Taxing Caloric Sweetened Beverages: Potential Effects on Beverage Consumption, Calorie Intake, and Obesity."

Dairy Delivers