Taxes on Berkeley soda Lead to Increased Retail Prices of Sugary-sweetened Beverages

Published Date : Oct 13, 2015

A new study has showed that the taxes levied on soda in Berkeley have led to higher retail prices of sugar sweetened that are sold in the city.

Not very long after the city became the first one in the United States to put excuse taxes on sugar sweetened beverages, questions whether the move would lead to the desired effects by increasing soda prices were rife. Latest research studies agree that the desired effect has been seen in the three months that the taxes were levied on all the sugar sweetened beverages sold in the city.

The results of the study, published in the American Journal of Public Health, have emerged about a year after the voters of Berkeley had approved an excise tax on sugary beverages of one cent per ounce. Unlike sales taxes that are to be paid by the customer at the pay desk, excise taxes are levied before a product is actually purchased by the customer, leading to potentially high retailer prices, so the customer is more aware of the higher cost of the product before they pick the sugar sweetened beverage from the shelves of a retail store.

The results of the new study differ from the ones of a working paper that published prices of Berkeley soda in August, which denoted that only a small proportion of the excise taxes have been passed through to the actual retail price of sugar sweetened beverages.

It was not earlier known how retailers would deal with the issue of added costs of excise tax to one of the most popular products in their shop racks. Increasing the overall prices of sugar sweetened beverages is considered a crucial first step in discouraging the rising rate of consumption of these beverages, a factor that has been associated to a number of health issues, such as obesity and diabetes. Thus, it is being considered extremely encouraging that the prices have increased at the retail side so soon after the implementation.