The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado

The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado

Published: Jan 22, 2021
Publisher: American Journal of Agricultural Economics (online ahead of print)
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Authors

John Cawley

David Frisvold

Chelsea Lensing

Key Findings
  • Across the multiple datasets, we find consistent evidence that the tax was largely, but not completely, passed through to consumers.
  • In both hand-collected store data and restaurant data, pass-through is slightly less than 75%, whereas pass-through is just over 50% using retail scanner data.
  • Consumers bear most, but not all, of the largest tax on sugar-sweetened beverages in the United States.

This paper estimates the pass-through of the largest tax on sugar-sweetened beverages enacted in the U.S., which is two cents per ounce in Boulder, Colorado. A strength of the paper is that, to achieve as complete a perspective as possible, we estimate the pass-through of the tax not only to beverage prices in retail stores but also to those in restaurants, and we examine data for the treatment community of Boulder and a comparison community of Fort Collins, Colorado, from four sources: (a) hand-collected data on prices from stores; (b) Nielsen Retail Scanner Data of store prices; (c) hand-collected data on prices in restaurants; and (d) web-scraped data from online restaurant menus. Across the multiple datasets, we find consistent evidence that the tax was largely, but not completely, passed through to consumers. In both the hand-collected store data and restaurant data, pass-through is slightly less than 75%, whereas pass-through is just over 50% using the scanner data; consumers bear most, but not all, of the largest tax on sugar-sweetened beverages in the United States.

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