BUSI 429 Week 8 Discussion Board Forum 8 Example

Discussion Board Forum 8: Sugar-Sweetened Beverage Taxes as Health Policy

BUSI 429 Healthcare Economics, Discussion Board Forum 8

Thread by [Student Name]

The city, its proposal and the classmates are composites; the textbook, Scripture and the peer-reviewed sources cited are real.

Our city council is considering a tax of 1.5 cents per ounce on sugar-sweetened beverages, with the revenue going to school nutrition and community health programs. Our hospital system has been asked to testify, since it treats many of the diabetes and obesity cases the tax is meant to prevent. The debate turns on two economic questions: will the tax actually change what people drink, and who will bear its cost? A third question, what the city should do with the revenue, may matter most to whether residents accept it.

Feldstein (2015) explains that economists support taxes on goods when their prices fail to reflect the full costs they create. Some of the costs of sugary drinks fall on public programs, such as Medicaid and Medicare, that pay for treating related diseases, and some fall on drinkers themselves, who may underweight long-term health effects when making daily choices. A tax raises the price, and how much consumption falls depends on how price-sensitive buyers are and how easily they can avoid the tax, for example by shopping elsewhere or switching to untaxed drinks.

The evidence shows real effects with some leakage. Roberto et al. (2019) compared Philadelphia, which adopted a 1.5-cent-per-ounce tax in 2017, with Baltimore, which did not. Prices of taxed beverages in Philadelphia rose by about 0.65 cents per ounce more than in Baltimore, and the volume of taxed beverages sold in the city fell substantially, although part of that decline was offset by increased sales in neighboring areas outside the city. Fliss Isakov et al. (2026) studied Israel's national beverage tax, which was introduced in 2022 and repealed after a year, and found that it raised prices across beverage categories and reduced sales of large taxed drinks, with sales of taxed beverages gradually rising again after repeal.

The strongest objection is fairness, and it deserves a direct answer. Lower-income households give up a bigger slice of their budgets to a beverage tax, although those households may also benefit most from lower consumption. I would support the tax if it were adopted regionally to limit cross-border shopping and if most revenue went to programs in the neighborhoods that pay the largest share. A beverage tax changes behavior through price; whether it is fair depends on where the money goes. Proverbs advises that whoever finds honey should eat only enough, lest too much make him sick (English Standard Version Bible, 2001/2016, Proverbs 25:16), a reminder that the goal is moderation, not punishment.

Reply to Whitney

Whitney, you argued that beverage taxes unfairly burden low-income families, who spend a larger share of their budgets on groceries. You are right that the tax is regressive in the narrow sense that poorer households hand over a bigger portion of what they earn. Feldstein (2015) encourages economists to ask both who pays a tax and who benefits from it, and here the answer is more complicated than it first appears. Lower-income households tend to drink more sugar-sweetened beverages and have higher rates of diabetes, so they may also gain the most from reduced consumption. Roberto et al. (2019) found that prices in Philadelphia rose by about two thirds of a cent per ounce relative to a comparison city, which means a family buying a two-liter bottle each week would pay roughly 44 cents more per bottle if it kept buying the same amount, a small sum for some households and a noticeable one for others. Whether the policy is fair overall depends heavily on how revenue is used. Philadelphia directed much of its revenue to prekindergarten and community programs, which tend to benefit lower-income neighborhoods. A tax that returns its revenue to the communities that pay most of it looks very different from one that simply adds to a general fund. Would your view change if the tax were paired with subsidies for fruits, vegetables or bottled water in the same neighborhoods? Combining a price increase on sugary drinks with a price decrease on healthier options would ease the burden on families while strengthening the shift the tax is meant to produce.

Reply to Andre

Andre, you pointed out that shoppers can simply cross the city line to avoid a local beverage tax, and you asked whether that undermines the policy. Cross-border shopping is a real limitation, and it is the most common argument retailers raise against local taxes. Roberto et al. (2019) found that the drop in taxed beverage sales in Philadelphia was partly offset by increased sales in neighboring areas outside the city. Pan and Zheng (2026) found a related spillover in Berkeley, where the beverage tax was followed by an 8.9% decline in beer purchases inside the city, with little change in beer prices, and the authors traced the decline mainly to cross-border shopping rather than to people drinking less beer. That finding suggests that local taxes can shift whole shopping trips, not just the purchase of the taxed product, which matters for local retailers and the city's sales tax base. Feldstein (2015) explains that the effect of any tax depends on how easily buyers can find substitutes, and a store a few miles away is an easy substitute. The economic answer is to make the tax area large enough that avoiding it is inconvenient, such as a county, region or state. Do you think a state tax would be politically possible in your area, or would a regional agreement among neighboring cities be more realistic? Either approach would reduce the leakage that weakens a single city's tax. Local retailers near the border might also be more willing to support a tax that applies equally to their competitors a few miles away.

References

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Feldstein, P. J. (2015). Health policy issues: An economic perspective (6th ed.). Health Administration Press.

Fliss Isakov, N., Ben Menachem, Y., Yackobovitch Gavan, M., Parker, C., Levy, A., Endevelt, R., Grinshpan, L. S., & Blaychfeld Magnazi, M. (2026). The effect of the Israeli sugar sweetened beverage tax implementation and repeal on beverage price and purchases. Public Health, 252, 106118. https://doi.org/10.1016/j.puhe.2025.106118

Pan, L., & Zheng, X. (2026). The unintended consequences of sugar-sweetened beverage taxes on sales and prices of beer beverages. Health Economics. Advance online publication. https://doi.org/10.1002/hec.70145

Roberto, C. A., Lawman, H. G., LeVasseur, M. T., Mitra, N., Peterhans, A., Herring, B., & Bleich, S. N. (2019). Association of a beverage tax on sugar-sweetened and artificially sweetened beverages with changes in beverage prices and sales at chain retailers in a large urban setting. JAMA, 321(18), 1799-1810. https://doi.org/10.1001/jama.2019.4249