A 1-cent-per-ounce soda tax could raise almost $1 billion in revenue every year if more cities implement taxes on sugary drinks, according to a new study.
On Wednesday, Harvard University’s T.H. Chan School of Public Health released a study analyzing what would happen if the 15 largest US cities with the ability to pass a 1-cent-per-ounce tax on sugary drinks did so.
Researchers found the new laws would result in a nearly 20% drop in soda consumption in cities including Los Angeles, Detroit, and Denver. The study, which used computer modeling to project the impact of the proposed taxes, predicted that cities could generate a cumulative $942 million per year in revenue from the taxes.
In November, Boulder, Colo., joined three cities in California’s Bay Area, including San Francisco, in passing soda taxes.
Inthe Bay Area, the three cities’ combined annual revenue from the taxes is expected to exceed $22 million.
In Philadelphia, a 1.5-cent-per-ounce soda tax that passed in June is expected to raise about $91 million annually. The funds will be used to expand pre-kindergarten programs, improve parks, and offer tax credits for businesses that sell healthy beverages.
People who back soda taxes say that they help promote health by discouraging people from drinking sugary beverages.
“By following the example of the seven that have already acted, cities have a golden opportunity to help their people avoid premature death and illness and cut health costs while raising revenue to make residents’ lives better in other ways,” Jim Krieger, the executive director of Healthy Food America – the food policy nonprofit that funded the Harvard study – said in a statement.
According to the study, the passage of soda taxes in 15 additional cities would result in a 6% average drop in diabetes rates and the prevention of 58,220 cases of obesity in impacted regions.
Critics of taxes on sugary beverages say the taxes unfairly target soda companies and do not encourage healthier habits.
“This computer simulation contradicts real-world evidence from the CDC showing that obesity and diabetes rates have been going up for years while soda consumption has been going down,” the American Beverage Association said in a statement on the study. “This report overlooks the CDC’s determination that obesity and diabetes are complex conditions with many contributing factors. As for the effect of soda taxes, it has been well-reported that they have never been shown to improve public health as was the case in Mexico, where a tax resulted in a reduction of only 4.9 calories per day in the average daily diet.”
While the soda industry has spent millions of dollars fighting soda taxes, Coca-Cola and PepsiCo are also investing in less-sugary drink options that wouldn’t be subjected to the taxes. Both companies often highlight that an increasing percentage of their business comes from the sales of things like bottled water, healthy snacks, and tea – not soda.