Tax Soda Calories, Economist Says

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Despite long political odds, a handful of legislators in New York and across the country want to fight the obesity epidemic by imposing new taxes to make soft drinks less palatable.

In a study released today, economist Chen Zhen, from the RTI International research institute, says lawmakers should consider a different approach. Most proposals have focused on taxing by soda size, but Zhen's analysis of purchasing pattern data in New York suggests a tax based on calorie content would be more effective, because it would make more fattening drinks more expensive.

"A per-calorie tax treats products with a different caloric content differently, basically making lower-calorie drinks more affordable," Zhen said. "Consumers are incentivized to search for a lower calorie drink."

Zhen found consumption fluctuates according to price, so when stores have a sale on Coca Cola and discount it by 10%, people typically buy 10% more Coke — and the opposite happens when the price goes up 10%. Zhen says for consumers who are unwilling to switch to sugar-free beverages, taxing by calorie could at least shift them to less sugary beverages.  

New York State is one of a dozen places nationwide considering a new soda tax. Similar proposals have been defeated twice in the state legislature.