Food In Canada

Don’t tax the soda, tax what goes into it: study

By Food in Canada staff   

Business Operations Research & Development

Iowa State U professors say applying a "sin tax" to food products at the store level is not the way to go; they recommend applying the tax at the processing level

Ames, Iowa – Researchers at Iowa State University say there is a better way to apply a “sin tax” to foods.

John Beghin and Helen Jensen, both economists and professors, say applying a sin tax to sweetened goods is not the most efficient and effective way of getting consumers to lower their caloric intake from sweet food.

In fact, the professors’ study, which was published in the Contemporary Economic Policy this month, found it would be more disruptive to consumers.

Tax inputs


According to the study, a better way is to tax the food processors on the amount of caloric sweeteners, such as corn syrup and sugar, they add to foods during processing – before the products hit store shelves.

Both professors are quick to point out that they are not advocating for or against any tax, but are researching how and where a possible sweetener tax would be most effective.

“We are not saying. ‘To resolve obesity, here is what you should do,’” says Beghin. “In that sense, we are not advocating anything. We are saying, ‘Given that you are considering a panoply of tax instruments, and there is a possibility of a soda tax, is there a better way to use that idea?’”

Jensen adds that they were not looking at health aspects. “Just the consumption of calories from sweetened goods and the disruption to the consumer.”

The research shows that if the goal of a sin tax on sweeteners is to reduce calories consumed, lawmakers should consider taxing the inputs instead of the final product.


Assessing the tax at the processing stage allows food processors to reduce the amount of sweeteners they put into their products. Processors will also have incentives to use more of the lesser-taxed artificial sweeteners, and less of the higher-taxed sweeteners that are heavy in sugary products.

These solutions would also raise the price at the store less than a direct tax on the end product, while reducing the calories attributable to the sweetener, says the study.


Any new tax on sweeteners, even the tax on food inputs proposed by the study, will cause prices to go up. One drawback of any tax on sweetened goods is the regressive nature of that tax.

In economic terms, regressive taxes are those that impact poorer economic groups more than higher ones.

The findings of the study fit generally accepted economic principles that say if you want to change a given behavior or economic decision, you should try to find a policy instrument that is closest to the behavior or decision, according to Beghin.

As part of the study, the two collected data from both government and private sources on industrial food inputs.

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