SWEETENED BEVERAGE TAXES
ECONOMIC BENEFITS AND COSTS ACCORDING TO HOUSEHOLD INCOME
A new study from University of Washington, led by HFA Executive Director Jim Krieger and University of Washington Associate Professor Jesse Jones-Smith is the first to use real-world tax data to describe the economic equity aspects of sweetened beverage taxes (SBTs). The study looked at taxes paid and benefits received from programs supported with tax revenues by people with lower and higher incomes in three cities with taxes. Not surprisingly, it found that people with lower incomes paid a larger proportion of their household income on SBTs compared to those with higher incomes, although the proportion of their incomes were quite small, ranging from 0.06% to 0.5% across the three cities. The annual per person dollar amount paid in taxes was also small ($5.50- $31) and did not differ by income level. Notably, the study found the net tax effect was to redistribute dollars from higher to lower income households. The dollar amount of tax revenues funding programs targeted towards people with lower incomes is greater than the amount they pay in taxes. This suggests a SBT is a progressive, equitable public policy when tax revenues are intentionally invested in communities with lower incomes. Read the study here.
- Lower income populations paid a higher percentage of their income in beverage taxes relative to higher income populations, although the percentage was small: (0.06% - 0.5% vs. 0.01 - 0.06%).
- There was no difference in the dollar amount of taxes paid per person per year by lower income and higher income households, which ranged from $5.50 to $31 across cities and income groups.
- The investment of tax revenues in lower income communities was greater than the amount these communities paid in taxes. The opposite was true for higher income communities.
- The annual net benefit to lower income communities ranged from $5.3 million to $19.1 million across the three U.S. cities included in the study.
DRAFTING SWEETENED BEVERAGE TAX LEGISLATION
RECOMMENDATIONS FOR INVESTING REVENUES TO ADVANCE EQUITY
Taxation is one of the most effective policies for reducing sales and purchases of sweetened beverages, which are a leading cause of diabetes, heart disease, and obesity in the United States. When sweetened beverage tax (SBT) revenues are strategically invested in the communities most impacted by health and social inequities and marketing of sweetened beverages, a SBT is a progressive public policy. Including specific dedication and allocation provisions in SBT legislation can ensure that revenues are invested in impacted communities to advance equity.
A team from Healthy Food America, Public Health Law Center and UConn Rudd Center developed recommendations for drafting SBT legislation that effectively dedicates and allocates revenues to intended purposes centered in equity and aligned with community priorities. The recommendations were informed by a review of all SBTs proposed or adopted in the United States between 2012-2021; interviews with policymakers and advocates with experience in drafting, adopting, and implementing SBT legislation; examination of how other types of excise taxes have approached revenue dedication and allocation; and consideration of legal issues relevant to drafting legislation. We presented our findings and recommendations in a webinar. The full report and a brief will be available later this summer.
Including provisions in tax legislation related to legislative intent, dedication and allocation of revenues, community participation in tax implementation and evaluation, and public reporting on use of the revenues helps to ensure that the tax revenues are invested to advance equity and health.
Recommendations for drafting tax legislation to advance equity
The full report will provide a comprehensive set of recommendations for designing provisions in SBT legislation to ensure that tax revenues advance equity aims and improve health. Highlights include:
- Explicitly express the intention to advance equity as a key purpose of the tax.
- Include the intention to invest tax revenues in priority communities impacted by inequities or disproportionately affected by sweetened beverages.
Describe additional legislative intent
- Include any additional purposes. Describe specific concerns (e.g., chronic disease), conditions shaping these concerns (e.g., access to healthy food), or types of programs that will be supported (e.g., fruit and vegetable subsidies).
Place tax revenues in a dedicated special budget fund
- Establish a special budget fund for deposit of tax revenues dedicated to specific purposes.
- Clearly describe the allowable uses of tax revenues deposited in the special fund, consistent with the legislatively expressed intent.
- Include non-supplantation language that restricts use of funds to expansion of existing programs or creation of new ones and prohibits backfill of other appropriations.
Describe how revenues will be allocated
- Describe the programs and activities to be supported with tax revenues and the communities that will benefit from these allocations.
- Allocate revenues to address health disparities noted in legislative intent, especially those caused by conditions associated with sweetened beverage consumption.
- Allocate revenues to support programs and activities in priority communities that address community-defined priorities and reflect community values.
Include participation by communities and other interested parties
- Establish an advisory board to advise government on implementation of legislation, including allocation of tax revenues.
- Consider reserving a majority or supermajority of advisory board positions for community members with lived experience and including people with subject-matter expertise related to allocation topics.
- Specify advisory board members’ roles, which should include making recommendations about allocation of revenues and monitoring and reporting on implementation of the SBT legislation.
Build in accountability for revenue allocation and tax implementation
- Require a public annual report on implementation of the tax legislation that includes revenues received, allocated and expended; activities funded by allocations; and advisory board allocation recommendations.
- Require evaluation of tax impacts on sweetened beverage sales, consumption and health outcomes, and of tax implementation processes.
Learn more by viewing a webinar that describes the recommendations and the research that supports them.
This report was prepared by Jim Krieger, Sally Mancini, Jamie Wallace and Susan Weisman, with support from Healthy Eating Research, a national program of the Robert Wood Johnson Foundation. The views expressed in this report do not necessarily reflect the views of the Foundation.
Centering Equity in Sugary Drink Tax Policy:
Tax Design and Policy Research Recommendations
Taxing sugary drinks has emerged as an important healthy food and chronic disease prevention policy. Sugary drink taxes generate substantial revenues to address community needs and reduce sales of sugary drinks. Yet they must do more. A well-designed tax promotes health and social equity by benefiting the people most harmed by the beverage industry’s sugary drink products and predatory marketing practices. It invests revenues in these impacted communities and gives them a strong role in deciding how to use tax revenues. This webpage contains recommendations for designing sugary drink taxes so they promote equity and for research on the equity impacts of these taxes from the Sugary Drink Tax Equity Workgroup. Recommendations are available as brief summaries and full reports.
TAX DESIGN & RESEARCH RECOMMENDATIONS
Equitable Sugary Drink Tax Policy Recommendations
Make Equity a Priority
- Make equity a priority goal in the legislative intent language.
- Include provisions that make the revenue allocation process equitable.
- Require evaluation of tax impacts on equity.
- Pass through a significant portion of revenues collected by state-level taxes to local community-led efforts and collaborations to improve equity.
- Structure sugary drink taxes as excise taxes paid by the producers or distributors of sugary drinks.
Invest Tax Revenues in Communities
- Invest in communities most impacted by health conditions caused by consuming sugary drinks.
- Address the social and economic determinants of health that contribute to inequities in preventable chronic diseases.
- Specify that revenue investments should grow long-term community capacity to advocate for policy and systems change.
- Specify a strong community role in revenue allocation decisions.
- Support community-based organizations in impacted areas to deliver programming and activities that support health and advance equity.
- Require processes to monitor and publicly report on tax revenue collections, allocations, and spending.
- Establish a dedicated sugary drink tax revenue fund within the budget that clearly states the permitted uses of these funds.
DOWNLOAD INFOGRAPHIC PDF
Healthy Food America and The Praxis Project, convened the Sugary Drink Tax Equity Workgroup in 2020 to develop these recommendations. The Workgroup was comprised of 24 community, professional, and academic experts working at the forefront of tax policy design, adoption, implementation, and evaluation in the US. Workgroup members are champions for healthy communities and equity. To guide its process, the Workgroup collaboratively developed a shared values statement:
The Sugary Drink Tax Equity Workgroup values sugary drink tax policies that provide sustainable sources of support for building health equity and social justice, community capacity and agency, and that hold food and beverage corporations accountable for the harms they bring to communities.
The Workgroup also developed messaging to counter industry arguments against sugary drink taxes. If you are interested in this messaging please contact Jim Krieger - [email protected] or Xavier Morales – [email protected].
The policy design recommendations are endorsed by the following organizations: Berkeley Media Studies Group, Boulder County Public Health, Center for Science in the Public Interest, ChangeLab Solutions, Childhood Obesity Prevention Coalition (WA State), Healthy Food America, Just Strategies, Public Health Law Center, Sugar Freedom Project - a project of InAdvance, The Praxis Project, and UConn Rudd Center for Food Policy & Obesity.
Sabrina Adler, ChangeLab Solutions
Rosalie Aguilar, Salud America
Rachel Arndt, Boulder County Public Health
Doug Blanke, Public Health Law Center
Francis Calpotura, Sugar Freedom Project, a project of InAdvance
Stacy Cantu, Salud America
Victor Colman, Childhood Obesity Prevention Coalition (WA State)
Molly Devinney, Sugar Freedom Project, a project of InAdvance
Aaron Doeppers, Voices for Healthy Kids
Lori Dorfman, Berkeley Media Studies Group
Nancy Fink, Center for Science in the Public Interest
Claudia Goytia, Voices for Healthy Kids
Joi Jackson-Morgan, 3rd Street Youth Center
Joelle Johnson, Center for Science in the Public Interest
Jim Krieger, Healthy Food America/ University of WA
Kirsten Leng, Healthy Food America
Kimberly Libman, ChangeLab Solutions
Sally Mancini, UConn Rudd Center for Food Policy & Obesity
Darya Minovi, Center for Science in the Public Interest
Xavier Morales, The Praxis Project
NaDa R. Shoemaker, Voices for Healthy Kids
Leika Suzumura, University of WA, MPH student
Roberto Vargas, San Francisco Sugary Drinks Distributor Tax Advisory Committee
Dwayne Wharton, Just Strategies
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