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Soda and similar taxes are beneficial for lower-income communities, UW study finds

The study found that sweetened beverage taxes give more in revenue, in the form of social programs than what communities pay upfront.

SEATTLE — A new study by the University of Washington (UW) found that sweetened beverage taxes, like soda, produce benefits for low-income families.

Often these taxes are met with controversies, with claims that adding costs hurts those who struggle financially, but the study found the opposite.

The study, “Sweetened beverage taxes: Economic benefits and costs according to household income” made by Jessica Jones-Smith, Melissa Knox and other researchers, focused on three cities (Seattle, San Francisco and Philadelphia). The study found that low-income households were not paying a significant amount of additional money and that these taxes result in a large net relocation of funds to lower-income communities.

“We found that overwhelmingly the benefits were outweighing the amount being paid by households, by the lowest income households,” said Knox, an associate teaching professor in the economics department at UW. Knox focuses on health economics, particularly on how people respond to health-related policies.

In short, they found that while households did end up spending more money, the communities received a significantly higher revenue from community programs. This is because, in the cities studied, the taxes were implemented alongside social nutritional programs, as opposed to just adding the additional tax revenue to a general fund.

Seattle has had a sweetened beverage tax since 2018.

“What we were trying to look at was the burden of sweetened beverages taxes was on households in three cities that have those taxes including Seattle,” said Knox. “And we wanted to look at by income groups, so lower versus higher income households and see if households of different income levels were paying different amounts of tax.”

For Seattle’s lowest-income communities, the study found that the average tax paid per person was $19, or $2,785,854 for the total of the lowest-income population. However, those same communities received over $6 million in money invested in the programs implemented.

The highest-income communities did pay less for these taxes (a little over $12 per person), but they are also receiving less in social programs.

In 2018, Seattle gathered over $22 million in sweetened beverage tax revenue, more than $7 million more than initially projected. Part of this money was used for the 13th Year Promise Scholarships, job training programs, initiatives designed to help close the food security gap, and aid programs for at-risk children. But, part of the revenue did end up going toward a general fund.

Under this view, the tax is seen as beneficial.

In all three cities studied there were no statistically distinct differences in the amount paid per person toward these taxes by income level, said Knox.

“We found that the lowest-income households paid a larger proportion of household income on the tax, unsurprisingly. However, the absolute level of annual per capita dollar amount paid on taxes did not differ by household income,” says the study.

Thus, they found that taxing sweetened beverages has come up as an effective nutritional policy.

“I hope the impact is that if (more) cities do decide in the future (to implement) these taxes that they would look at what Seattle in particular, but also San Francisco and Philadelphia, are actually doing to make sure that the money that's being brought in from these taxes is actually being put back into communities that have already experienced the most health impact from consuming these sugary beverages,” said Knox.

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