Sugar Tax Would Put Nation's Medical Bills on a Diet

Released: 21-Jan-2014 10:00 AM EST
Source Newsroom: Cornell University
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Newswise — ITHACA, N.Y. — Taxing sugar – before it’s added to processed foods – would reduce obesity-related disease in America, and cut medical costs to boot, according to research at Cornell and Stanford universities.

“Nutrient-specific taxes could have an important effect in inducing healthier purchasing behavior among consumers,” Cornell’s Michael Lovenheim and Stanford’s Matthew Harding write in a January 2014 working paper published by the National Bureau of Economic Research.

A nationwide tax on sugar would have the broadest positive effect because so many processed foods have lots of sugar – and consumption of fat and salt in those sugary products would be collaterally reduced when consumers are faced with a sugar tax. A 20 percent tax on sugar, for example, would reduce consumption – and calories – by about 18 percent.
“Taxes on nutrients would do much more to support healthier nutritional choices than would taxes on products,” said Lovenheim, associate professor of policy analysis and management in Cornell’s College of Human Ecology.

Unhealthy-nutrient taxes would be even more effective if they were applied on a nationwide basis, Lovenheim thinks, to keep people from crossing state lines (or going online) to get tax-free unhealthy goods.

“In a way, we’re already paying a ‘fat tax’ for eating unhealthy food and failing to exercise,” the Cornell economist observed. “Obesity-related disease costs American taxpayers and health care consumers more than $147 billion a year.”

Funding support for the study, “The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-specific Taxes,” came from the Robert Wood Johnson Foundation, the UPS Foundation and the U.S. Department of Agriculture.


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