Sugary Drink Tax Calculator
Important Caveats: This model calculator is intended to provide a rough estimate and starting point to project the revenue from a tax on sugary drinks, and to illustrate how various assumptions affect the projections. A jurisdiction actively considering a tax should develop a more rigorous local estimate based on its unique context. Given the magnitude of potential non-compliance and possible variation across jurisdictions, the revenue projections here should be considered optimistic (assuming 100% compliance) and adjusted downward by at least 10%.
A city or county's listing in the calculator does not necessarily imply that the jurisdiction currently has legal authority to levy a sugary drink tax. It is essential to consult with an expert in your state's tax law to ascertain the available options.
Click here for a legal and practical guide to designing sugary drink taxes.
For any questions, please contact Tatiana Andreyeva, Director of Economic Initiatives, at tatiana.andreyeva@uconn.edu. Click here for more information on help using this calculator, development of the calculator, data sources, important local adjustments, and references.
Note: The city calculator has been updated to expand the list of cities and to use the latest population data (9/5/2017).
Calculator options
In estimating tax revenues, the calculator provides options for setting inputs to the model.
Year: The user can select a year between 2017 and 2020.
State or City: The user can select any state or any city or county listed in the drop-down menu. For a city or county not on the list, contact Jim Krieger.
Tax rate: The user can select a tax rate ranging from 0.5 to 3.0 cents per ounce. Tax rates range from 1 to 2 cents per ounce in cities that have adopted taxes.
Tax pass-through rate: The pass-through rate is the percentage of the tax that is added to the base price and paid by consumers. The default and recommended setting for the tax pass-through rate is 100%. It is not certain what the pass-through rate is in a given jurisdiction. Real-world data are available from Mexico (100% rate) and Berkeley (47-70% rate). To consider alternative scenarios, the user can select an incomplete pass-through rate between 50% and 99%. The larger the pass-through rate, the greater the price increase, the greater the drop in consumption, and the lower the estimated tax revenue.
Price elasticity: Price elasticity describes how a change in price affects the volume of purchases. For example, if the elasticity is -1.0, a 10% increase in price results in a 10% decrease in total purchases. An elasticity of -1.2 predicts that a 10% increase in price yields a 12% reduction in purchases. The calculator uses a value of -1.21, based on the best current data (Powell et al. 2013). If you want to explore the impact of other elasticities between -0.70 to -1.30, contact Healthy Food America for assistance. The larger the elasticity, the greater the drop in consumption, and the lower the tax revenue.
Non-compliance: This tax revenue calculator assumes 100% compliance. However, to account for the likely occurrence of non-compliance by some distributors, the user is advised to adjust the revenues down by 10-30%.