The effects of taxing sugar-sweetened beverages across different income groups

Health Econ. 2014 Sep;23(9):1159-84. doi: 10.1002/hec.3070. Epub 2014 Jun 4.


This paper investigates the impact of sugar-sweetened beverages (SSB) taxes on consumption, bodyweight and tax burden for low-income, middle-income and high-income groups using an Almost Ideal Demand System and 2011 Household level scanner data. A significant contribution of our paper is that we compare two types of SSB taxes recently advocated by policy makers: A 20% flat rate sales (valoric) tax and a 20 cent/L volumetric tax. Censored demand is accounted for using a two-step procedure. We find that the volumetric tax would result in a greater per capita weight loss than the valoric tax (0.41 kg vs. 0.29 kg). The difference between the change in weight is substantial for the target group of heavy purchasers of SSBs in low-income households, with a weight reduction of up to 3.20 kg for the volumetric and 2.06 kg for the valoric tax. The average yearly per capita tax burden on low-income households is $17.87 (0.21% of income) compared with $15.17 for high-income households (0.07% of income) for the valoric tax, and $13.80 (0.15%) and $10.10 (0.04%) for the volumetric tax. Thus, the tax burden is lower, and weight reduction is higher under a volumetric tax.

Keywords: censored demand; obesity; soft drink; sugar-sweetened beverages tax; tax regressivity.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Adult
  • Australia / epidemiology
  • Body Weight
  • Carbonated Beverages / economics*
  • Carbonated Beverages / statistics & numerical data
  • Family Characteristics
  • Female
  • Health Policy
  • Humans
  • Income / statistics & numerical data*
  • Male
  • Models, Theoretical
  • Taxes* / statistics & numerical data