Author ORCID Identifier

Roy Bahl:

Richard Bird:

Document Type

Working Paper

Publication Date



Countries everywhere are considering the increasing evidence on the possible health benefits from reducing the consumption of sugary drinks – often called sugar-sweetened beverages (SSB). This paper examines the rationale for taxing sugary drinks as a way to reduce sugar consumption and considers the experience to date. That excess consumption of sugar has serious adverse health consequences and that taxing sugar-sweetened beverages (SSB) may reduce the consumption of sugar are both largely supported by the evidence. What is less clear is whether SSB taxes can adequately address the problems arising from the excess consumption of sugar. If so, the question becomes how taxes might best be structured to do the job.

The principal argument for a tax on SSB is to counter the harm that consumers may do to themselves by consuming too many sugary drinks. External costs are a much smaller part of the story. In any case, one may accept the basic public health case for discouraging the excess consumption of sugar without concluding that SSB taxes are the most effective and equitable way to achieve that objective. An excise tax on sugar-sweetened beverages is attractive because of its simplicity and its relatively low compliance and administrative costs. However, it covers less than half the consumption of added sugar, designing an appropriate tax is not an easy task, especially in the context of most developing countries, and the tax rate required to have a major impact on obesity may well higher than most countries are likely to accept. A better way to combat obesity might be a tax on sugar itself combined with such policies as more transparent labelling and measures that will encourage heathier lifestyles and diets.


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