The information in this report is intended to provide educational information on the cost-effectiveness of sugary drink excise taxes.
High rates of obesity are one of the greatest public health threats facing the United States. Sugary drink consumption can lead to type 2 diabetes, heart disease, cavities, weight gain, and obesity. Overweight and obesity are linked to many chronic conditions such as high blood pressure and some cancers.
The current public health landscape demonstrates that nutrition remains critical, even during an infectious disease outbreak like COVID-19. Health conditions such as obesity, diabetes, and heart disease are related to nutrition and can increase the risk of severe illness from COVID-19. Rates of these chronic diseases are still too high in New York state, disproportionately burdening communities of color.
Federal, state, and local governments have long considered implementing excise taxes on sugary drinks to reduce consumption, reduce obesity, and provide an additional source of government revenue.1-4 As of 2019, seven U.S. jurisdictions are enforcing beverage tax policies.
We modeled implementation of a state excise tax using two scenarios. Scenario one included a tax on sugary drinks only and scenario two included a tax on both sugary and diet drinks. Each scenario examined three potential tax rates: $0.01/ounce, $0.015/ounce, and $0.02/ounce.
All six tax models resulted in lower levels of sugary drink consumption, thousands of people for whom obesity would be prevented (note: referred to as “cases” throughout this report), improved health equity, and hundreds of millions of dollars in health care cost savings. The estimated effects of the interventions on health care costs were based on national analyses that indicated excess health care costs associated with obesity among children and adults.5 Health care cost savings per dollar invested ranged from $22.40 to $57.40 across the six models. Projections demonstrate that annual revenue generated from a sugary drink tax is likely substantial.
Gortmaker SL, Long MW, Ward ZJ, Giles CM, Barrett JL, Resch SC, Greatsinger A, Garrone ME, Tao H, Flax CN, Cradock AL. New York State: Sugary & Diet Drink Taxes. The CHOICES Project Team at the Harvard T.H. Chan School of Public Health, Boston, MA; November 2021. For more information, please visit www.choicesproject.org.
The design for this brief and its graphics were developed by Molly Garrone, MA.
This work is supported by the New York City Department of Health and Mental Hygiene and The JPB Foundation. The findings and conclusions are those of the author(s) and do not necessarily represent the official position of the funders.
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- American Public Health Association. Taxes on Sugar-Sweetened Beverages. 2012.
- Hakim D and Confessore N. Paterson seeks huge cuts and $1 billion in taxes and fees. The New York Times, Jan 19, 2010.
- Falbe J, Rojas N, Grummon AH, Madsen KA. Higher Retail Prices of Sugar-Sweetened Beverages 3 Months After Implementation of an Excise Tax in Berkeley, California. Am J Public Health. 2015 Nov;105(11):2194-201.
- Leonhardt D. The battle over taxing soda. The New York Times, May 19, 2010.
- Finkelstein EA, Trogdon JG. Public health interventions for addressing childhood overweight: Analysis of the business case. Am J Public Health. 2008;98(3):411-5.