Longer-term impacts of the Oakland, California, sugar-sweetened beverage tax on prices and volume sold at two-years post-tax

Abstract

Sugar-sweetened beverage (SSB) consumption is associated with obesity and independently associated with type 2 diabetes and cardiovascular disease. Not only is obesity a growing public health problem, but it is also most recently associated with increased risk of severe illness from COVID-19. Taxes on SSBs are a policy tool used to help curb SSB consumption and are currently implemented in 7 U.S. cities and more than 40 countries. On July 1, 2017, Oakland, California, implemented a 1-cent/ounce tax on SSBs with ≥25 kilocalories/12 ounces. This study estimated the impact of the Oakland tax on prices, volume sold, and cross-border shopping two-years post-tax relative to one-year pre-tax. Universal product code-level Nielsen retail scanner data on non-alcoholic beverage sales were analyzed using a difference-in-differences design with Sacramento, California, as the comparison site. Taxed beverage prices increased by 0.67 cents/ounce, on average, in Oakland relative to Sacramento, corresponding to 67% pass-through. Taxed beverage volume sold decreased by 18% in Oakland relative to Sacramento, with a larger decrease for family-size beverages (23%) relative to individual-size beverages (8%). There was a 9% increase in volume sold of taxed beverages in the two-mile border area surrounding Oakland relative to the Sacramento border area, driven by a 12% increase for family-size taxed beverages. After accounting for this cross-border shopping, there was a net decrease of 6% in taxed beverage volume sold in Oakland. There was no significant change in untaxed beverage volume sold in either Oakland or its border area relative to their respective comparison sites, suggesting there was no substitution to untaxed beverages and cross-border shopping may have been limited to taxed beverages. This two-year post-tax study of the Oakland SSB tax adds to the limited number of longer-term evaluations of local U.S. SSB taxes.

Keywords: Cross-border shopping; Fiscal policy; SSB tax; Sugar-sweetened beverages; Tax pass-through; Tax policy.