DO TAXES ON SODA AND SUGARY DRINKS WORK? SCANNER DATA EVIDENCE FROM BERKELEY AND WASHINGTON STATE

Christian Rojas and Emily Wang

Economic Inquiry, 2021, vol. 59, issue 1, 95-118

Abstract: We study two beverage taxes: the SSB tax of 1¢/oz in the city of Berkeley (in effect since 2015) and the temporary 2010 soda tax of 0.166¢/oz in Washington State. Using detailed scanner data, we find that prices in Washington reacted sharply and promptly (often by a larger magnitude than the tax), whereas retail prices in Berkeley reacted marginally (by less than 30% the magnitude of the tax). Further, we find a 5% volume reduction in Washington but fail to detect an effect in Berkeley. We discuss the possible causes for the discrepancy in effectiveness, in particular cross‐border shopping. (JEL H22, L66, I18)

Date: 2021
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