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Roles of SNAP Sales Tax Exemption and Soda Taxes in the Demand for Soda: Evidence from Household Scanner Data
Although excise taxes on soda have been proposed with the aim of reducing obesity rates, soda purchased with SNAP benefits is exempted from sales taxes. On average, the SNAP users drink more soda and face higher risks of obesity. However, no study has linked exemption from soda taxes to soda purchases among the SNAP users.
Objective
Examine the roles of SNAP sales tax exemption and soda taxes in the demand for soda among the tax-paying and tax-exempt households in the jurisdictions with and without soda taxes.
Methods
Information on soda purchases were obtained from the household scanner data for 2010-2012 and merged with the annual, population-weighted county-aggregated data on the sales tax rates on soda that exceeded the tax rates for general food items. The elasticities of the demand for soda were computed using two-part models.
Results
The tax rate elasticity of the demand for soda was significant at -0.033 among the tax-paying households but was close to zero among the tax-exempt households. The household sales tax exemption was associated with 12.2% higher soda purchases in jurisdictions with soda taxes but not in jurisdictions without soda taxes.
Conclusion
The SNAP sales tax exemption is associated with soda purchases but only in jurisdictions with soda taxes. Failing to take account of the SNAP sales tax exemption will understate the effectiveness of soda taxes by 7% and overstate the tax burden among low-income households by 200%. Evidence suggests the sales tax emption, rather than food assistance, is responsible for the association of SNAP with soda purchases.
Learning Areas:
Biostatistics, economicsPublic health or related laws, regulations, standards, or guidelines
Public health or related public policy
Social and behavioral sciences
Systems thinking models (conceptual and theoretical models), applications related to public health
Learning Objectives:
Explain the roles of SNAP sales tax exemption and soda sales taxes in the demand for soda.
Keyword(s): Public Health Policy, Food Security
Qualified on the content I am responsible for because: I have been co-investigator of multiple federally and foundation funded grants focusing on health and nutrtion outcomes of contextual/environmental factors such as prices, taxes, and other public health policies.
Any relevant financial relationships? No
I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.