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Avoidance behaviors circumventing the sugar-sweetened beverages tax

Qi Zhang, Jill McCluskey (), R. Karina Gallardo and Michael P. Brady

Food Policy, 2021, vol. 105, issue C

Abstract: Taxes on sugar-sweetened beverages and other types of “sin taxes” are usually introduced at the local level and on the supply side; the efficacy of such taxes is challenged by tax avoidance behavior. In this study, we evaluate the impact of sugar-sweetened beverage taxes in Seattle, WA; Boulder, CO; Cook County, IL (Chicago); Philadelphia, PA, and two cities in the San Francisco Bay Area in California (Berkeley and Oakland). We use grocery scanner data relying on a series of difference-in-difference designs. Results show that each cent per ounce of taxes causes the price of the taxed beverages to increase in a range from 0.47 to 0.98 cents/ounce, and the sales quantity of taxed beverages to decrease in a range of 5.1–14.4%. But the efficacy of the sugar-sweetened beverage tax is undermined by two avoidance behaviors: (1) cross-border shopping avoidance, where people shop outside of the taxed area; (2) substitution avoidance, in which people switch from taxed to tax-exempt beverages that are just as high in sugar. The results from this study provide evidence that sugar-sweetened beverage taxes can be effective. However, to enhance the effectiveness of the taxes, policy makers should consider tax avoidance when developing future similar policies.

Keywords: Sugar-sweetened beverage tax; Tax avoidance; Cross-border shopping avoidance; Substitution avoidance (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.foodpol.2021.102166

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