state snack and soda taxes from 2003–2007: a public health
TRANSCRIPT
State Snack and Soda Taxes from 2003–2007: A Public Health Policy Approach to Discouraging Consumption of Snacks and Sodas
Presented at the American Public Health Association annual meeting, Washington, D.C., 2007
STUDY OVERVIEW
ACKNOWLEDGMENTS
DISCUSSIONRESULTS
Background
Obesity is a complex health issue associated with many preventable causes of death such as heart disease and stroke. In 2005, 23.9% of U.S. adults were obese and obesity prevalence increased in all states from 1995–2005.1 Consumption of sugar-based soft drinks and snack items contribute to weight gain and obesity in both juvenile and adult populations.2-4
It is not only the individual who suffers from the effects of obesity, but society as a whole. U.S. medical expenditures for obesity-related disease and illness were an estimated $75 billion in 2003 dollars, with additional costs in lost productivity.5 Taxpayers are responsible for financing about half of obesity-related medical costs through Medicare and Medicaid.5 As obesity rates and obesity-attributable medical expenditures for both children and adults continue to climb, public health advocates search for effective strategies to help fight this battle. It is estimated that a national tax of 1 cent per 12-ounce soft drink would generate about $1.5 billion annually and similar revenues could be generated from a snack tax.6 Recent data on the state-level sales tax variance for sodas and snack products are not readily available.
Study Aims1. To compare state sales tax rates for sodas and
snack products sold in two locations—grocery stores and vending machines.
2. To identify the extent to which states “disfavor” sale of soft drinks and snacks by taxing them at a higher rate than food products generally.
Data Sources and Methods
Data Sources• State tax rates: Westlaw and Lexis-Nexis
statutory and administrative law databases
• Food tax rates obtained from the Federation of Tax Administrators
Methods• Primary legal research for the state tax rates for
sodas and snack products
• Telephone verification by state tax administrators
• On-site field verification in 5 states where information from the state conflicted with state laws
Prior reports have stated that no state currently levies a tax on snack products;7,8 however, the data reported herein dispel that myth. In fact, our research confirms that 40 states do, in fact, impose some type of sales tax on sodas and/or snack products and, in several cases, that these taxes are higher than the standard state sales tax for food (i.e., disfavored tax status).
Evidence is emerging on the relationship between taxation and obesity rates on consumption of soft drinks and snack products with some studies indicating strong, positive associations between state taxation and changes in obesity prevalence7 and other studies estimate that the demand for snack products would only change by a negligible amount at lower tax rates.8
At the same time, evidence from other public health areas indicates that food pricing is associated with consumption patterns9 and that higher cigarette10 and alcohol11 tax rates are associated with reduced consumption and reduced consequences associated with consuming those products.
What is not known is how the states are using the revenue generated from the sales taxes reported in the current study.12 In other words, are the sales taxes being used for general revenue generation or are they dedicated for some other purpose?
This study did not examine the extent to which the states dedicate a portion of their sales tax to fund programs specifically targeting obesity and overweight issues (akin to what has occurred in the tobacco arena relative to dedicated excise taxes). This is an area deserving of future study.
STUDY LIMITATIONS
• Examined cross-sectional data for two years, 2003 and 2007.
• Examined only one aspect of state taxation of sodas and snack products. Other types of taxes include license and privilege fees applied to
manufacturers, distributors, and wholesalers.
• Did not attempt to link sales tax data to consumption rates or overweight and obesity prevalence; these are the subject of future study.
This study was conducted by The MayaTech Corporation for the University of Illinois at Chicago as part of the Robert Wood Johnson Foundation-supported ImpacTeen project (PI: Frank Chaloupka, Ph.D.).
Vended items are taxed at a higher rate than grocery items
REFERENCES1. Blanck HM, Dietz WH, Galuska DA, et al. State-specific prevalence of obesity among adults—United States,
2005. Morbidity and Mortality Weekly Report 2006 September 15;36(55):985-8.
2. Malik VS, Schulze MB, Hu FB. Intake of sugar-sweetened beverages and weight gain: a systematic review. Am J Clin Nutr 2006 August 1;84(2):274-88.
3. Center for Science in the Public Interest. Dispensing Junk: How School Vending Undermines Efforts To Feed Children Well. Washington, DC: CSPI; 2004.
4. James J, Thomas P, Cavan D, Kerr D. Preventing childhood obesity by reducing consumption of carbonated drinks: cluster randomised controlled trial. BMJ 2004 May 22;328(7450):1237.
5. Finkelstein EA, Fiebelkorn IC, Wang G. State-level estimates of annual medical expenditures attributable to obesity. Obesity Res 2004 January 1;12(1):18-24.
6. Jacobson MF, Brownell KD. Small taxes on soft drinks and snack foods to promote health. Am J Public Health 2000;90(6):854-7.
7. Kim D, Kawachi I. Food taxation and pricing strategies to "thin out" the obesity epidemic. Am J Prev Med 2006 May;30(5):430-7.
8. Netscan's Health Policy Tracking Service. State Actions to Promote Nutrition, Increase Physical Activity, and Prevent Obesity: A 2006 First Quarter Legislative Overview. Falls Church, VA: Thomson West; 2006 Apr 3.
9. French SA. Pricing effects on food choices. J Nutr 2003 March;133(3):841S-3S.
10. Chaloupka FJ, Warner KE. The economics of smoking. In: Cuyler AJ, Newhouse JP, editors. The Handbook of Health Economics. New York: North-Holland, Elsevier Science B.V.; 2000;1539-627.
11. Chaloupka FJ. The effects of price on alcohol use, abuse, and their consequences. In: Bonnie RJ, O'Connell ME, editors. Reducing Underage Drinking: A Collective Responsibility. Washington, D.C.: National Research Council, Institute of Medicine, The National Academies Press; 2004; 541-64.
12. Kuchler F, Tegene A, Harris JM. Taxing snack foods: manipulating diet quality or financing information programs? Review of Agricultural Economics 2005;27(1):4-20.
Shelby Eidson1, J.D.; Jamie Chriqui1,2, Ph.D., M.H.S., Hannalori Bates1, B.A, Frank Chaloupka2, Ph.D. • 1The MayaTech Corporation 2Institute for Health Research and Policy, University of Illinois at Chicago
Average sales tax rates by product and sales location
Number of states with sales taxes on sodas and snack products by location
Soda and snacks are taxed at a higher rate than food
0
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
SodasCandyGumIceCream
PopsiclesMilkshakes/BakedGoods
Chips/Pretzels
0
1.0%
2.0%
3.0%
4.0%
0.5%
1.5%
2.5%
3.5%
4.5%
SodasCandyGumIceCream
PopsiclesMilkshakes/BakedGoods
Chips/Pretzels
2003
2007
1.33%
3.13%
1.33%
3.22%
1.55%
3.22%
1.78%
3.44%
2.81%
3.63%
2.90%
3.60%3.44%
3.97%
1.20%
3.13%
1.20%
3.24%
1.42%
3.24%
1.63%
3.45%
2.70%
3.74%
2.87%
3.71%
3.43%
4.02%
0
5
10
15
20
25
30
35
40
SodasCandyGumIceCream
PopsiclesMilkshakes/BakedGoods
Chips/Pretzels
VendingGrocery
0
5
10
15
20
25
30
35
40
SodasCandyGumIceCream
PopsiclesMilkshakes/BakedGoods
Chips/Pretzels
VendingGrocery
2007
34
39
30
36
30
37
16
32
20
35
18
33
16
33
34
39
30
37
29
38
15
32
19
35
17
33
15
33
0
5
10
15
20
25
30
SodasCandyGumIceCream
Milkshakes/BakedGoods
Chips/Pretzels
VendingGrocery
20
28
16
26
14
26
0
20
4
23
0
21
Number of states with higher sales tax than food generally by product and sales location, 2007
0
5
10
15
20
25
30
SodasCandyGumIceCream
Milkshakes/BakedGoods
Chips/Pretzels
19
VendingGrocery
19
25
15
24
14
24
0
5
22
0
20
Number of states with higher sales tax than food generally by product and sales location, 2003
The following states do not impose a sales tax on candy for vending/grocery sales: AK, AZ, CO, DE, LA, MA, MI, MT, NH, NV, OH, OR, and PA.
The following states do not impose a sales tax on sodas for vending/grocery sales: AK, AZ, CO, DE, LA, MA, MI, MT, NH, NV, OR, and VT.
Sales tax rates for sodas, 1/1/07
8% 8%7% 6% 5% 4% 3% 2% 1% 0 1% 2% 3% 4% 5% 6% 7%
Sales tax rates for candy, 1/1/07
Vending Grocery
MS
TN
RI
NJ
WA
MN
TX
CA
KY
IN
ID
FL
CT
AR
DC
NE
KS
WV
WI
SC
NM
ND
ME
MD
IA
OK
NC
VA
SD
NY
HI
GA
AL
WYUT
MOIL
8% 8%7% 6% 5% 4% 3% 2% 1% 0 1% 2% 3% 4% 5% 6% 7%
Vending Grocery
MS
RI
NJ
WA
MN
TX
IL
CA
TN
PA
KY
IN
ID
FL
CT
AR
DC
OH
NE
KS
WV
WI
SC
NM
ND
ME
MD
IA
OK
NC
WY
VA
SD
NY
HI
GA
AL
UT
MO
VendingGrocery
Food tax 1.33%
VendingGroceryFood tax 1.20%
2003