KANSAS CITY — An investigation by the American Medical Association found that the tax on sweetened and diet beverages in Philadelphia resulted in substantially higher prices and lower consumption of taxed products, but about 25% of the reduced consumption was offset by purchases in nearby non-taxed areas. The report was published in the Journal of the American Medical Association.
“A beverage excise tax on sugar-sweetened and artificially-sweetened beverages in a large urban setting was associated with a significant increase in beverage prices and a significant reduction in volume sales of taxed beverages, although changes in sales volume were partially offset by purchases in neighboring areas,” the report said.
Authors of the study reported receiving grants from Bloomberg Philanthropies, which supported the study, the A.M.A. said.
The study analyzed sales before and after the tax began from 291 stores in Philadelphia, where a 1.5c-per-oz tax on caloric and artificially sweetened beverages was implemented in 2017, and in Baltimore, which did not have a tax. The data accounted for about 25% of total taxed beverages sold in Philadelphia.
“In Philadelphia and Baltimore, the mean price per oz of taxed beverages increased at all stores in the after-tax periods and taxed beverage volume sales decreased in all store types,” the report said. “Compared with Baltimore, Philadelphia experienced significantly greater increases in taxed beverage prices and significantly larger declines in volume of taxed beverages sold in the after-tax period.” There were no substantial changes in sales volume of nontaxed beverages.
There was significant pass-through of the tax to prices at supermarkets, mass merchandisers and pharmacies, the report said. The tax was associated with significant per-oz increases of 0.65c at supermarkets, 0.87c at mass merchandise stores and 1.56c at pharmacies. Total volume sales of taxed beverages declined by 1.3 billion oz, or 51%, in Philadelphia, but sales in Pennsylvania border zip codes without the tax increased by 308.2 million oz, or 43%, partially offsetting the decrease in Philadelphia’s volume sales by 24.4% resulting in a net reduction of 38%.