What is the evidence for sweetened beverage taxes and taxes on unhealthy foods? What is the evidence for sweetened beverage taxes and taxes on unhealthy foods?

Food and beverage affordability influences people’s purchasing decisions. To promote healthier diets, WHO recommends fiscal policies, such as taxes that raise the relative price of sweetened beverages and unhealthy foods high in nutrients and ingredients of concern (e.g., fat, salt and sugar) that are often ultra-processed, as well as subsidies and other strategies that lower prices of healthier foods and increase their availability. Increased prices from taxes can deter consumers from purchasing products.

• A systematic review of 35 studies with more than 20,000 participants found that economic interventions showed the most promise for changing food purchasing behavior, with 8 of 9 studies in real stores and all 6 studies in simulated environments detecting effects on purchasing.
• Emerging evidence shows that combining subsidies and taxes leads to healthier food choices, especially for people with lower incomes.

Foods high in nutrients and ingredients of concern (e.g., fat, salt and sugar) that are often ultra-processed have become increasingly available and affordable, worsening global diets. High consumption increases the risk of diet-related chronic diseases such as Type 2 diabetes, cardiovascular disease and some cancers.  Sugar-sweetened beverages are one of the leading sources of free sugar in diets.

Taxes can help offset the “true cost” these products impose on society, including health care, social care and environmental costs.

→Learn more about the “true costs” on Food Policy Hub’s problem page

• A ten-country study found that healthier diets cost more per day than less healthy diets.
• Between 2018 and 2023, worldwide sales of sugary beverages rose from 358 billion liters to 376 billion liters.
• In 79 out of 82 countries studied between 1990 and 2016, the cost of sugar-sweetened beverages as a share of income fell an average 9% annually in low- and middle-income countries and 2% annually in high-income countries.
• Global intake of sugar-sweetened beverages increased by 16% between 1990 and 2018, with increased consumption in all regions other than Latin America and the Caribbean and high-income countries.
• The World Health Organization recommends limiting consumption of *free sugar to less than 10% of total calories and ideally less than 5%. A small can (250 ml or about one cup) of a regular sugar-sweetened beverage alone can exceed the daily limit for adults and children.
• The most comprehensive review on the risks of ultra-processed products to date found that high consumption is linked to 32 harmful health effects, including a 50% higher likelihood of cardiovascular disease and 12% higher risk of diabetes.
• Consuming just one sugar-sweetened beverage per day increases the risk of Type 2 diabetes by as much as 25%.

Taxes on sweetened beverages can raise prices and decrease purchases, both directly through the price increase and by increasing awareness of health harms. These policies can decrease sugar consumption from beverages, lowering the risk of Type 2 diabetes and improving oral health.

The industry often responds by reformulating products with nonsugar sweeteners—which WHO advises against—supporting the case for taxing all sweeteners.

• A 10% increase in the price of sweetened beverages decreases demand between 8% and 15.9%.
• Sales of sugar-sweetened beverages fell by an average of 15% in 16 places where taxes were implemented.
• In 2014, Mexico implemented a sugar-sweetened beverage tax of 1 peso per liter (about a 10% volumetric tax). Between 2012 to 2016, purchases of taxed beverages dropped 37%, with the largest declines among lower-income consumers. Purchases of water and other healthier beverages increased after the tax.
• In 2018, South Africa implemented a sugar-sweetened beverage tax of about 10%. Purchases of taxable beverages dropped by an estimated 29%, with a 51% reduction in sugar from those beverages and greater declines among low-income households.
• A study of more than five million pregnant people in five U.S. cities with sugar-sweetened beverage taxes found a 41.4% decreased risk of gestational diabetes among other positive perinatal outcomes.
• Improvements in oral health outcomes—including reduced tooth extractions and dental carries—have been observed after the introduction of sugary beverage taxes in the UK, US and Mexico.

Emerging evidence shows taxes on unhealthy foods can reduce purchases and consumption of targeted products, as well as generate government revenue and raise awareness of healthy eating.

• In Hungary, a 2011 specific excise tax on ready-to-eat foods and beverages high in salt, sugar or caffeine led to a 3.4% reduction in purchasing processed foods and a 1.1% increase in purchasing unprocessed foods.
  • The tax had a long-term effect: a second impact assessment found that most consumers reported sustained reduced consumption (59-73%) and some reported even lower consumption than in the first assessment (19-36%).
• Mexico’s 2014 tax of 8% on nonessential foods saw decreases in the volume of purchases of taxed products compared to a scenario with no tax. This was especially true for lower-income households.
  • In the first year after implementation, purchases of taxed products decreased by 6% in households with middle-income status and by 10% in those with lower-income status, compared to projected purchase rates with no tax.
• Denmark introduced a tax on saturated fat in food in 2011, which was abolished just over a year later due to misleading negative media coverage. Research found that the tax resulted in a 4% reduction in saturated fat intake.
• A modeling study in Finland suggests that a sugar tax of €1/kg would lead to about a 13% reduction in the incidence of Type 2 diabetes and a reduction in coronary heart disease incidence. Removing value-added taxes on fresh fish, fruit and vegetables was also projected to have a small positive effect on heart disease incidence.
• A modeling study in The Philippines found a 20% tax on foods high in sodium or sugar could generate 2.37 billion Philippine pesos (about US$40.7 million) in health care savings over 20 years.

The primary objective of taxes on sweetened beverages and unhealthy food should be health related. Taxes should be designed to increase prices of targeted products and reduce purchases while preventing reformulation with unhealthy substitutions (e.g., replacing added sugar with nonsugar sweeteners), thereby reducing people’s intake of nutrients of concern. Ideally, taxes will be paired with policies that make healthier food and beverages more accessible and affordable, increasing intake of essential nutrients and water.

• Many countries (116) have a national excise tax on at least one type of sugar-sweetened beverage. However, many existing taxes are not designed with a public health objective. For example, 45% of countries also apply the tax to bottled water.
• A meta-analysis of 62 studies found that sugar-sweetened beverage taxes do raise prices as intended, but companies don’t pass the full rate on to shoppers. On average, only 82% of the tax gets added to the price consumers pay. This means a 10% tax only increases what people pay by about 8%, so higher tax rates may be needed to achieve the desired health impact.
• Most sugary drink tax rates worldwide have been low, raising prices by less than 10%.
• A modeling study found that a one-time excise tax that increases prices of sugar-sweetened beverages by 50% could prevent 2.2 million early deaths globally over the next 50 years.
• In 2016, six Gulf Cooperation Council countries implemented high taxes: 50% on carbonated soft drinks and 100% on energy drinks. In Saudia Arabia’s first year, soft drink sales dropped 41% and energy drink sales fell 58%. Soft drink sales were 35% lower than in neighboring countries that had not yet implemented the tax.

Taxes on unhealthy food and beverages should be combined with efforts to make healthier options more accessible and affordable (e.g., subsidies for healthier crops or at the retail level). While taxes may be financially regressive in the short term—affecting lower-income people most—they become progressive over time through reduced health care costs, recouped productivity and health improvements, particularly benefiting lower-income populations who face higher rates of diet-related chronic diseases. Directing tax revenue toward equity programs can increase the tax’s effect on health and economic equity.

• A review of 20 studies on taxes on foods high in fat, salt and sugar found that lower-income households were more responsive to taxes and reduced their purchases of these products more than other groups.
• A study in three U.S. cities found that sweetened beverage taxes created net financial benefits of $5.3-16.4 million annually for lower-income communities through strategic revenue allocation, with these communities receiving far more in program funding than they paid in taxes.
• A study in Kazakhstan found that a sugar-sweetened beverage tax would provide greater net financial benefits to populations with lower income than higher income.

Revenue from taxes can be used for public health goals, which is helpful for garnering public support for taxes. Specifically, revenue can be used to improve health equity by enhancing access to healthy food or funding other public services that primarily benefit populations with lower income.

• A one-time tax that raises sugary beverage prices by 50% worldwide would generate US $328 billion over five years and cut consumption by 60%. Low-and middle-income countries would receive the largest share of this revenue (73%).
• A meta-analysis on public opinion shows that 39–66% of people support sugar-sweetened beverage taxes. Support varies depending on how the tax is framed and how revenue will be used, with greater public acceptance when tax revenue is dedicated to health purposes.
• Seven U.S. cities with taxes on sugar-sweetened beverages collect an average annual revenue of US $134 million. Of this, 85% was used to support programs and services in communities that experience health inequities, discrimination and exclusion.
• In its first year, South Africa’s sugar-sweetened beverage tax raised ZAR 2 billion (US$140 million or around US$2.5 per capita), representing about 0.15% of total tax revenue for the 2018-2019 fiscal year.