Soda taxes don’t appear to be like bag taxes

People hate paying just a little extra for the right to use plastic bags, but they don’t seem too bothered by paying a small soda tax.  According a new report by the RAND institute, taxes of 4 to 7 cents per can only decreased kids’ consumption by one can per week.  As the AP summarizes, “the taxes made no real difference on overall soda consumption or on obesity for kids overall. They did have a small effect on certain children — especially those from families with an annual income of $25,000 or less. Those kids — who drank about seven cans of soda a week, on average — drank one less can because of the taxes, Sturm said.”  On the other hand, the report does conclude that soda consumption will decrease significantly, whatever that means, until taxes reach 18 cents per can.

I really don’t think this finding is as negative as the reporting suggests.  Assuming a can of soda retails for $1, these taxes are only on the scale of 3-7%, whereas a reduction in consumption of one can per week is a bit more than a 14% drop.  That’s a pretty elastic response.  Second, the negative corollary of the D.C. experiment is that it is raising a lot less revenue than expected.  If a soda tax is about raising revenue first (and health benefits second), then it’s okay that it hasn’t decreased consumption an incredible amount.