Revenue Calculator for Sugary Drink Taxes
New, Advanced Online Tool Offers Revenue Estimates for Sugary Drink Taxes
Excise taxes on sugary drinks can generate considerable revenue for cities, counties and states. The Revenue Calculator for Sugary Drink Taxes estimates potential annual revenues from excise taxes on sugary drinks (i.e., beverages with added caloric sweeteners: sodas, fruit drinks, sports drinks, ready-to-drink tea and coffee, enhanced water, and energy drinks). Zero-calorie/reduced calorie beverages such as diet drinks are not currently included in our estimation. Note that powders (e.g., fruit drink powder mixes) are also not included in our estimation.
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.
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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).
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 Sara Soka
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%.