This paper aims to estimate the consequences of an additional 20% tax on sugar-sweetened beverages (SSBs) on health and health care expenditure. Participants were adult (aged > = 20) Australians alive in 2010, who were modelled over their remaining lifetime. We used lifetable-based epidemiological modelling to examine the potential impact of a 20% valoric tax on SSBs on total lifetime disability-adjusted life years (DALYs), incidence, prevalence, and mortality of obesity-related disease, and health care expenditure. Over the lifetime of adult Australian alive in 2010, seemingly modest estimated changes in average body mass as a result of the SSB tax translated to gains of 112,000 health-adjusted life years for men (95% uncertainty interval [UI]: 73,000-155,000) and 56,000 (95% UI: 36,000-76,000) for women, and a reduction in overall health care expenditure of AUD609 million (95% UI: 368 million- 870 million). The tax is estimated to reduce the number of new type 2 diabetes cases by approximately 800 per year. Twenty-five years after the introduction of the tax, there would be 4,400 fewer prevalent cases of heart disease and 1,100 fewer persons living with the consequences of stroke, and an estimated 1606 extra people would be alive as a result of the tax. The tax would generate an estimated AUD400 million in revenue each year. Governments should consider increasing the tax on sugared drinks. This would improve population health, reduce health care costs, as well as bring in direct revenue.