Taxing Snack Foods: What to Expect for Diet and Tax Revenues

Abstract

Health researchers and health policy advocates have proposed levying excise taxes on snack foods as a possible way to address the growing prevalence of obesity and overweight in the United States. Some proposals suggest higher prices alone will change consumers' diets. Others claim that change will be possible if earmarked taxes are used to fund an information program. This research examines the potential impact of excise taxes on snack foods, using baseline data from a household survey of food purchases. To illustrate likely impacts, we examine how much salty snack purchases might be reduced under varying excise tax rates and possible consumer price responses. We find that relatively low tax rates of 1 cent per pound and 1 percent of value would not appreciably alter consumption - and, thus, would have little effect on diet quality or health outcomes - but would generate $40-$100 million in tax revenues.

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