Soda Tax Policy Analysis

From my research on the effectiveness of the soda tax policy, I found three different arguments. The first argument supported the increased tax on sugar-sweetened beverages. These articles were written from a medical perspective, so they focused on the health benefits that could be achieved from the implementation of the tax. They believe that these excise taxes are beneficiary for both the consumers and the state as it will increase sales tax revenue, while decreasing sugary beverage consumption, which will then improve public health and fight obesity. The second group reasoned that the net effect of the excise taxes on sweetened beverages is next to zero. Their studies show that an increase in taxed beverages will decrease a consumer’s demand, which will lead them to cost-efficient substitutes that may be equally as bad for their health, therefore, there will be no gain the health department.

This is because their research showed that the allocation of consumer spending will result in an increase in demand for labor in another industry, thus causing a small percentage change in revenue. The final group of articles were written from an economist perspective. After studying the effect of this tax on the economy, which includes consumers and producers, they conclude that an increased tax would cause more harm than good, so they fought to repeal it. Their studies show that since both consumers and producers bear the burden of the taxes, there will be a decrease in demand and production. A decrease in demand will affect the sellers’ ability to pay for labor, which will then lead to a cut in the workforce. If the government does not intervene to bring prices to an equilibrium, in the long run producers will leave the market and this will result in a deadweight loss in sales tax revenue for the