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Taxing Snack
Foods: Manipulating Diet Quality or Financing Information Programs?
Abebayehu
Tegene
Economic Research Service, USDA
Institute of
Agricultural and Environmental Research
Seminar Series
Tennessee State University, Nashville, TN
April 13, 2005
Public
health officials are searching for new ways to address the growing
prevalence of obesity and overweight in the United States. Health
researchers and health policy advocates have proposed levying excise
taxes on snack foods as a possibility. 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 percent 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 more $40-$100 million in annual tax
revenues.
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