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External Partners Alumni Search Submit Return to home Search Search About About Olin Home Why Olin Equity, Diversity & Inclusion Leadership & Strategy News & Media Events Contact Us Programs Programs Home Explore Our Programs BS in Business Administration MBAs Specialized Master's Doctoral Executive Education Dual Degrees Faculty & Research Faculty & Research Home Faculty Directory Research Research Centers Olin Brookings Commission Olin Award Student Resources Student Resources Home Career Services Center for Experiential Learning Entrepreneurship Academic Calendars Student Organizations For Current Students For Military Veterans Admissions Admissions Home Scholarships & Aid Attend Program Events Visit Olin Ask a Student Student Profiles Request Information Refer a Candidate External Partners Alumni Study finds Philadelphia’s soda tax lacks fizz December 2, 2019 By Jill Young Miller 2 minute read Home News Study finds Philadelphia’s soda tax lacks fizz If Philadelphia’s soda tax is any indication, local soda taxes don’t work as well as policymakers intend. Olin&＃8217;s Song Yao, associate professor of marketing, and two other researchers studied the effects of Philadelphia&＃8217;s soda tax, which took effect in January 2017. Several US cities have enacted soda taxes to raise revenue and fight obesity among their citizens. Berkeley, California, was the first, but Philly was the first&＃160;big&＃160;city to adopt one. It uses the revenue to fund schools and improve parks, recreation centers and libraries. The city&＃8217;s 1.5-cents-an-ounce tax led to a 34% price increase for soda. And soda sales in Philadelphia dropped sharply&＃8212;by 46%, according to the working paper&＃160;&＃8220;The Impact of Soda Taxes: Pass-through, Tax Avoidance, and Nutritional Effects.&＃8221; Song Yao But here&＃8217;s the catch: Soda sales at stores just outside the city increased dramatically. Apparently, a lot of people leave Philly to buy their soda elsewhere. &＃8220;The cross-shopping outside the city offset more than half of the reduction&＃8221; of soda sales in the city, Yao said. So the net reduction in sugary drinks consumption is only 22%, he pointed out. The reduction in calories and sugar people consumed because of the tax is even smaller; 16% and 15%, respectively. &＃160; The health impact is mediocre at best. &＃160; Song Yao The tax also imposes a disproportionate burden on low-income people, he said. &＃8220;Access to transportation is more difficult for low-income households, so they engage in less cross-shopping and end up paying more inside the city.&＃8221; So far,&＃160;NPR,&＃160;MarketWatch,&＃160;National Review&＃160;and&＃160;The Washington Post&＃160;have reported on the findings. Policy lessons The findings in Philadelphia provide policy lessons on how to design soda taxes or other types of &＃8220;sin&＃8221; taxes, according to the paper by Yao, Stephan Seiler of the University of California in Los Angeles, and Anna Tuchman of Northwestern University. &＃8220;If taxes are localized (as is the case for all current soda taxes), high tax rates will be sub-optimal for generating revenue because they lead to cross-shopping, which reduces the tax base,&＃8221; they write. &＃8220;A larger geographic coverage will make cross-shopping more difficult and therefore generate greater tax revenue.&＃8221; About the Author Jill Young Miller As research translator for WashU Olin Business School, my job is to highlight professors’ research by “translating” their work into stories. Before coming to Olin, I was a communications specialist at WashU’s Brown School. My background is mostly in newspapers including as a journalist for Missouri Lawyers Media, the Atlanta Journal-Constitution, The Washington Post and the Sun-Sentinel in South Florida. Contact Us For assistance in finding faculty experts, please contact Washington University Public Affairs. Monday&＃8211;Friday, 8:30 to 5 p.m. Sara Savat, Senior News Director, Business and Social [email protected] &＃160; Kurt Greenbaum,Communications [email protected] Twitter: WUSTLnews Share article Apply Now Visit Us Request Info One Brookings Drive, St. Louis, MO 63130-4899 [email protected] 314-935-7301 News & Media Events Faculty Directory WashU Center for Career Engagement Washington University home Olin Links Sitemap Privacy Policies Title IX Accessibility ©2024 Washington University in St. Louis