2010-07-02 / Top Stories

DOH Says Sweetened Beverage Tax Pays

A proposed tax on sugar-sweetened beverages could prevent 145,000 or more cases of adult obesity in New York State over the next decade, according to new research from Columbia University’s Mailman School of Public Health. By nudging consumers toward less-caloric beverages, the penny-per-ounce levy would prevent an estimated 37,000 or more cases of type- 2 diabetes over the same period, the study finds – saving state residents an estimated $2 billion in health care costs.

The NYC Health Department commissioned the Mailman study to help gauge the likely health impact the tax proposed by Governor David Paterson to help address New York State’s $9.2 billion budget gap for the coming fiscal year. In its current form, the proposed measure would place an excise tax of 1 cent per ounce ($1.28 per gallon) on soft drinks. At the same time, the measure would eliminate state and local sales tax on bottled water, diet soda and other soft drinks with 10 or fewer calories per 8 fluid ounces.

To estimate the likely impact of the penny–per-ounce tax, Dr. Claire Wang of Mailman’s Department of Health Policy and Management, analyzed available data on sugar sweetened beverage consumption, the related health risks and the effects of price on purchasing behavior. The findings, which will be submitted for publication in a peer-reviewed scientific journal, suggest that the tax would give consumers an incentive to switch to lower-cost, lower-calorie beverages. The tax would raise the price of sugary drinks by 20 percent to 25 percent in retail outlets, reducing statewide consumption by 15 percent to 20 percent. Statewide, that drop in consumption would represent 366 million fewer calories each day, 134 billion fewer calories each year, and 1.3 trillion fewer calories over the coming decade. The report predicts that the tax would have the greatest effect among people between 20 and 44 years old and among the groups most affected by obesity and diabetes, including blacks, Hispanics and lower-income people.

The Health Department today is calling on lawmakers to consider the proposed tax package as a way to cut consumption, reduce obesity rates and lower health care costs by $209 million per year. But Wang notes that a pennyper ounce excise tax would also generate approximately $937 million a year in revenue for New York State, including $404 million for New York City. (Eliminating the tax on lower-calorie beverages would reduce the net revenue to roughly $815 million annually.) “These tax revenues could potentially be used to generate even more health benefits for New York residents by funding programs to promote healthy eating and active lifestyles for adults and children,” she writes.

“Drinking beverages loaded with sugars increases the risk of obesity and associated problems such as diabetes, heart disease, stroke, arthritis and cancer,” said Dr. Thomas Farley, New York City Health Commissioner. “In New York City alone, diabetes causes 20,000 hospitalizations, 3,000 amputations and 4,700 deaths every year. We know that sugared beverages are fueling this epidemic – they’re the leading source of sugar and excess calories in the American diet – and we know that even a modest increase in cost can help temper consumption.”

The proposed tax comes at a time when approximately three out of every five New Yorkers are overweight or obese, as are nearly 40% of public school children in New York City – triple the rates seen during the 1960s. On average, Americans now consume 200 to 300 more calories each day than we did 30 years ago. Obesity-related illness costs New York State residents nearly $8 billion in medical costs each year.

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