Tag Archives: consumption taxes

Soda tax really works in Berkeley

soda-pop

A just released study on the effects of the Berkeley, California soda tax of one cent per ounce found that soda consumption has fallen 52% over the last four years. That is a remarkable price elasticity. Assuming a 20-ounce bottle costs $1.99, with a tax of 20 cents, that implies a price elasticity of -5. In other words, for every 1% o price increase, demand falls 5%. The study relied on household surveys, which are not always reliable about consumption quantities, so it would be interesting to see actual sales data.

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