The impact of the Oakland sugar-sweetened beverage tax on bottled soda and fountain drink prices in fast-food restaurants

Abstract

Beverage taxes are increasingly being implemented as an intervention aimed at reducing the consumption of sugar-sweetened beverages (SSBs) and their associated adverse health outcomes. Whether these taxes achieve public health objectives depends, in part, on the extent to which beverage prices increase, known as tax pass-through. Fast-food restaurants are a significant source of SSBs and an environment where the effect of beverage taxes is less understood. This study evaluates the impact of an SSB tax on prices of beverage products sold in fast-food restaurants in Oakland, CA, which implemented a 1-cent per ounce excise tax on SSBs containing 25 or more calories per 12 fluid ounces in 2017. A pre-post intervention difference-in-differences (DID) research design with Sacramento, CA, serving as a comparison site was used to estimate the effect of the tax on fast-food restaurant beverage prices. A panel of fast-food restaurants were audited 1-month pre-tax and 6- and 12-months post-tax. DID regression models with restaurant and product fixed effects were used to estimate tax pass-through to prices of bottled regular (N = 150 observations from 39 restaurants) and diet (N = 106 observations from 32 restaurants) soda and fountain drinks (N = 501 observations from 73 restaurants). Statistically significant (p < 0.05) pass-through of 82% was found for bottled regular soda one year after the tax was implemented. This effect represents an 8% increase in prices from baseline. No statistically significant changes in prices were found in either time period for taxed and untaxed fountain drinks and untaxed bottled diet soda. Keywords: Sugar-sweetened beverages, Excise tax, Tax pass-through, Obesity, Fast food