by Dr. Terry Stoops
Former Director of the Center for Effective Education, John Locke Foundation
A study of the implementation of a soda tax on sugar-sweetened beverages sold in Oakland, CA suggests that it didn’t. Here is the abstract of “Oakland’s Sugar-Sweetened Beverage Tax: Impacts on Prices, Purchases and Consumption by Adults and Children,” a recent NBER working paper:
Several cities in the U.S. have implemented taxes on sugar-sweetened beverages (SSBs) in an attempt to improve public health and raise revenue. On July 1, 2017, Oakland California introduced a tax of one cent per ounce on SSBs. In this paper, we estimate the impact of the tax on retail prices, product availability, purchases, and child and adult consumption of taxed beverages in Oakland, as well as of potential substitute beverages. We collected data from Oakland stores and their customers and a matched group of stores in surrounding counties and their customers. We collected information in the months prior to the implementation of the tax and again a year later on: (1) prices, (2) purchase information from customers exiting the stores, and (3) a follow-up household survey of adults and child beverage purchases and consumption. We use a difference-in-differences identification strategy to estimate the impact of the tax on prices, purchases, and consumption of taxed beverages. We find that roughly 60 percent of the tax was passed on to consumers in the form of higher prices. There was a slight decrease in the volume of SSBs purchased per shopping trip in Oakland and a small increase in purchases at stores outside of the city, and we find some evidence of increased shopping by Oakland residents at stores outside of the city. We do not find evidence of substantial changes in the overall consumption of SSBs or of added sugars consumed through beverages for either adults or children after the tax.