New research suggests that imposing an excise tax on sugar-sweetened beverages will increase the retail price of soda, KTOO reported.
Researchers from the University of California-Berkeley found that nearly a year after Berkeley became the first city in the country to enact a soda tax, it has already had its desired effect by increasing the retail prices of sugary drinks sold in the city. In 2014, Berkeley voters approved an excise tax of one cent per ounce on sugary drinks.
Unlike a sales tax, which is paid by consumers at the register, an excise tax is levied before the point of purchase, potentially leading to higher retailer prices, so buyers are more aware of the higher cost before they pluck the beverage from store shelves.
"No one knew how retailers would deal with the added costs of the tax," Jennifer Falbe, lead author of the study and a UC Berkeley postdoctoral researcher in public health nutrition, said in a statement. "Increasing the price of sugary drinks is a critical first step in discouraging consumption, so it's incredibly encouraging that we're seeing pass-through of the tax to higher retail prices so early after implementation. We expect higher price increases in the future as small business owners learn more about the tax."
For the study, researchers collected and analyzed data on most beverage prices in fall 2014, before the soda tax was passed. They not only looked at stores in Berkeley, but also included retailers in Oakland and San Francisco to account for other factors that may affect prices regionally. Data was collected again three months after the tax went into effect.
They found that in Berkeley, soft drink prices increased by about seven-tenths of a cent more per ounce than in other cities. Given the tax was one cent per ounce on distributors of sugar-sweetened beverages, this means that about 70 percent of the tax was passed through to the retail price. Fruit-flavored drinks, including cranberry cocktail and lemonade, saw a slightly smaller increase of about half a cent per ounce. For all categories of sugar-sweetened beverages, the overall price increased about half a cent per ounce.
According to the Sugar-Sweetened Beverage Product Panel of Experts, the city of Berkeley raised $375,000 from the tax in the first three months of collection, The Daily Californian reported.
The researchers also looked at the price of non-sugary beverages, which did not change more in Berkeley than in comparison cities during the study period.
The study also distinguished between retail store types. The price of sugary beverages changed little at chain drugstores but more at supermarkets.
"Regardless of price increases, soda taxes can be a means of sustainably funding public health efforts," study senior author Dr. Kristine Madsen, an associate professor at UC Berkeley's School of Public Health, said in a statement.
The findings are detailed in the American Journal of Public Health.
