Last November, Berkeley passed a one-cent-per-ounce tax on sugar-sweetened beverages under the assumption that if beverages were more expensive, people would drink less of them. However, according to economists John Cawley and David Frisvold, prices of sugar-sweetened beverages in the city have barely increased.
Why? The businesses that sell these products are deciding against passing along the burden of these taxes to their customers in an effort to keep their business.
Cawley and Frisvold explain, “retailers don't want to push shoppers to nearby stores outside of Berkeley, where they can still buy cheaper, tax-free soda.”
This is why taxes on our products don’t work. While small business owners eat the cost of the tax and end up hurting their own business, consumers may not see any price changes.
These researchers concluded in a new National Bureau of Economics Research working paper, “the Berkeley soda tax, because it is passed through to consumers to a lesser extent than anticipated, will result in less of a reduction in consumption, and thus less health improvement, than anticipated.”
Hopefully lawmakers will see that obesity is not a public health issue that can be solved with the quick “fix” they hoped a tax could provide. Obesity is a complex issue that requires real solutions, like the ones the beverage industry is working towards. It all starts with education, and by providing people with the information and choices they need we are helping them achieve a balanced lifestyle.
To learn more about why taxes do not help solve public health issues visit YourCartYourChoice.com.