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Taxing Snack Foods: What to Expect for

Diet and Tax Revenues

Fred Kuchler, Abebayehu Tegene, and J. Michael Harris

Abstract

Health researchers and health policy advocates have proposed levying excise taxes on snack foods as a

possible way to address the growing prevalence of obesity and overweight in the United States. 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 cent 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 $40-$100 million in

tax revenues.

Keywords: Obesity, excise tax, price elasticity of demand, snack food

Introduction

The prevalence of obesity for Americans age 20-74 rose from 15 percent in the late 1970s to 23.3 percent in the late 1980s and to 30.9 percent in 1999-2000 (Flegal et al., 2002).1 Increases occurred for

both men and women in all age groups. Similar increases occurred for the share of the population that

is overweight, but not so fat as to be labeled obese. Also, the prevalence of overweight children has

been rising (Ogden et al., 2002).2 Overweight children often become overweight adults, and there is

reason to believe the trend toward overweight and obesity among all Americans may continue.

Whether the high and rising prevalence of overweight and obesity is a public or private health problem

is a contentious issue. Many in the public health community say overweight and obesity are public

health problems because so many people suffer from chronic diseases associated with these conditions.

Agriculture Information Bulletin No. 747-08 August 2004

1 In population studies, it is common to classify adults as obese, overweight, healthy weight, or underweight. Such classification

uses a measure known as body mass index (BMI), calculated as weight in kilograms divided by height in meters squared. Individuals are classified as obese when their BMI is greater than or equal to 30. Individuals are classified as overweight, but not

obese, when their BMI is greater than or equal to 25, but less than 30. Healthy weight is less than 25, and greater than or equal

to 18.5. Underweight is less than 18.5.

2 Children are not classified as obese. Instead, categories are denoted overweight and at risk of being overweight. Body mass

index cutoffs for both categories vary with age and gender.
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They argue that these problems pose as large a threat of morbidity as poverty, smoking, or

problem drinking (U.S. Department of Health and Human Services, 2001). This conclusion is leading public health officials to search for new ideas for programs designed to

influence diet, exercise, and other weight-reducing lifestyle choices.

Conversely, Epstein (2003) argues that public health interventions should be directed at

communicable diseases and pollution, problems partly caused by individuals making

choices without accounting for the cost they impose on others. Obesity is not a communicable disease; one person’s diet and lifestyle choices do not put others at greater risk of

obesity. There are no noncommunicable epidemics. So, Epstein concludes that obesity

does not warrant public sector resources. Further, interventions intended to mitigate

obesity’s adverse effects are likely to have unintended effects that compromise public

health. When the public sector expands, individual wealth has to contract, leaving individuals less able to make choices that reduce their health risks and less able to pay for

new medical and risk-reducing technologies. The impact may be to reduce incentives

for research and development in health sciences.

Despite the possibility that any intervention designed to reduce the prevalence of obesity might reduce economic efficiency, there is no shortage of ideas for ways government could intervene to influence diet and lifestyle choices, including an excise tax on

snack foods. The various proposals to tax snack foods are not all alike. They all aim to

reduce consumption of snack foods, but differ substantially on the mechanism through

which taxes will achieve that goal.

In this short paper we cannot resolve whether obesity and overweight are best left to

individual diet and lifestyle decisions or whether economic efficiency is more likely

advanced through public sector programs. We can, however, bring together information on consumer food choices and responsiveness to price changes and use that information to suggest whether taxes alone could change consumers’ diet quality and

health. First, we identify characteristics and goals of four snack tax proposals. Then,

we use the ACNielsen Homescan panel data to examine likely impacts of taxes on

consumers’ dietary choices. (See box, “ACNielsen Homescan Panel Data.”)

The range of snack foods is large. To keep our discussion to a manageable size, we

illustrate points by focusing only on salty snack foods.

To establish a baseline for analysis, we tabulated quantities of salty snack foods purchased by different types of households. Associated household demographic characteristics allow us to identify systematic differences in snack food demand among household types. We use the baseline to forecast the immediate impacts of taxes. There are

two sources of uncertainty in such forecasting: namely the size of the tax and consumer response to a price increase. Currently, there is no information suggesting that a

tax of any size is likely. Without any likely limits to impose on the problem, we examine impacts of a range of taxes, from putatively small to coercively large. We have

some information that suggests consumers are not likely to substantially cut back their

purchases of snack foods in response to retail price increases. Thus, we examine a

range of responses to taxes, but limit the range to proportionately small responses.

No tax proposal is sufficiently detailed for an analyst to precisely identify its burden

or whether it raises equity issues. However, our data allow us to show that a relatively

small ad valorem tax (an excise tax imposed as a specific percentage or tax rate rather

than a per unit tax) would not immediately change consumers’ diets, but would raise

tax revenues. 

What Has the Public Health Community Said 

About Taxing Snack Foods?

Battle and Brownell (1996) proposed four policy changes to combat obesity, including

taxes on unhealthful foods and subsidies for healthy foods. They also argued for

restricting food advertising and possibly eliminating advertising of candy, soft drinks,

fast foods, and sugared cereal aimed at children, as well as providing more bicycle

2

...a relatively small ad 

valorem tax would not

immediately change 

consumers' diets, but would

raise tax revenues.
paths and recreation centers to encourage physical activity. Although they did not specify

a tax level, their purpose in manipulating food prices was to create an incentive for consumers to increase consumption of “healthy” foods and decrease consumption of

“unhealthy” foods (p. 762).

Nestle (2002) listed five classes of changes in public policies intended to promote better

diet and lifestyle choices: education reforms, food labeling and advertising reforms,

health care and training requirements, transportation and urban development requirements, and taxes. Taxes include the following: 

“Levy city, state, or federal taxes on soft drinks and other ‘junk’ foods to fund ‘eat less,

move more’ campaigns. Subsidize the costs of fruits and vegetables, perhaps by raising

the costs of selected foods of minimal nutritional value” (p. 367).

Nestle did not specify a tax level nor exactly define the foods that she would tax. Her

proposal is similar to that of Battle and Brownell in that the tax is intended to raise

snack food prices and lower fruit and vegetable prices, creating an incentive for consumers to substitute fruit and vegetables for snack foods in their diets. But Nestle’s tax

proposal is also intended to raise revenues to fund an information program.

Marshall (2000) proposed (for the United Kingdom) extending the value-added tax (17.5

percent) to particular foodstuffs he considered culpable in raising serum cholesterol levels—those high in saturated fats—and to exempt from taxation those foods currently

taxed that are cholesterol neutral. He argued that this new selective tax would provide

incentives both for consumers to change their diets and for manufacturers to reformulate

foods. For example, he would tax whole milk but not skim milk.

“Biscuits, buns, cakes and pastries, puddings, and ice cream could be taxed if they raised

cholesterol concentrations but exempt if the ratio of polyunsaturates to saturates (and trans

fatty acids) were more favourable” (p. 303).

3

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ACNielsen Homescan Panel Data 

This report uses a unique data set, the ACNielsen Homescan panel, a nationwide

panel of households that scanned their food purchases (from all retail outlets) at

home. Data included detailed product characteristics, quantity, and expenditures for

each food item purchased by each household. The data are unique in that they

include detailed purchase information as well as demographic information about the

households in the panel.

We used the random-weight panel, which is a subset of the full panel (12,000

households). Households in the subset scanned both fixed-weight products (products with a universal product code, or UPC) and random-weight products (e.g.,

meat and poultry, fruit and vegetables). From this set, we drew data from households that were in the panel for at least 10 out of the 12 months in 1999—7,195

households. Our sample is projectable to the U.S. universe of product purchases.

The data set is a stratified random sample. The sample was selected based on both

demographic and geographic targets. Stratification was done to ensure that the sample matches the U.S. Census. The household was the primary sampling unit and

there was no intentional clustering. The weight assigned to each household reflects

the demographic distribution within strata.

We calculated quantity-weighted average prices each household paid for various types

of salty snack foods in a year by summing household expenditures for the entire year

for each type of snack food and dividing by quantity purchased over the year. The

average annual prices we calculate account for promotions and coupon use.
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While his proposal was intended to reduce the incidence of ischemic heart disease, medical associations in England and Australia have more recently considered similar taxes

to combat obesity.

Jacobson and Brownell (2000) countered Marshall’s proposal by arguing that legislators would prefer to establish tax rates for entire classes of foods, like snack foods,

rather than taxing an attribute like saturated fat levels in foods. They proposed a tax of

1 cent per 12-ounce soft drink and 1 cent per pound of candy, chips, and other snack

foods, or fats and oils. Their plan depends on demand being unresponsive to price

changes as they would earmark taxes to fund information campaigns.

Proponents of snack food taxes have voiced a variety of goals. Not all the goals can be

realized, at least immediately. For example, if a snack foods tax was passed on to consumers in the form of higher retail prices, and consumers were very responsive to

changes in snack food prices, consumers might abandon snack foods. In that case,

there would be no tax revenue for funding an information campaign. From the tax proponents’ perspective, this situation would have a desirable aspect: Consumers would

be purchasing and, presumably, consuming fewer snacks. The undesirable aspect

would be that there would be no money to try to inform consumers how they ought to

eat. So, the desirable aspect would last only as long as the tax; removing the tax would

remove the incentive to economize on snacks.

Alternatively, if consumers simply paid the tax without altering their snack food consumption, diet quality would be unchanged, snack food manufacturers’ sales and revenues would be unchanged, and there would be no incentive for manufacturers to

reformulate their products. There would, however, be tax revenues that could be earmarked for an information program. Suppose that the point of an information program

is to change consumers’ preferences, making snack foods less desirable. If such a program were successful, consumers would become less willing to purchase snacks. That is,

at each price at which snacks might be sold, consumers would choose less. But that success would reduce tax revenues. So, if the information program resulted in a permanent

change in consumer preferences, the program’s budget would contract along with the

demand for snacks.

Linking a shrinking program budget with program success, however, is opposite to the

way organizations, private or public sector, usually operate. Usually, a division of a

private sector company that increases profits or a public sector agency that provides

additional public services soon receives larger budgets, additional staff, and more

responsibility. The challenge for an information program lies in finding a way to use

dwindling tax funds effectively. 

Whether there will be tax revenue available or whether the tax (absent an information

program) will change consumers’ diets depends on how big an incentive the tax is for

consumers. The incentive effects will depend on the tax base (which foods are taxed)

and the tax rate, and how important those foods are to consumers—namely the extent

to which consumers will modify their dietary choices to escape the tax. If consumers

consider the tax a trifle, or if there are no untaxed foods consumers could substitute for

snack foods, there will be few or no dietary changes.

Who Purchases Snack Foods and 

How Much Do They Purchase?

While salty snacks are a subset of all snack foods, focusing attention on this class of

snack food is sufficient to show three points. First, snack food consumption is nearly

universal, so almost all households will bear some burden for a tax that raises snack

food prices. Second, descriptive statistics show that there are systematic differences

among consumers, with both quantity purchased and expenditures following demographic and household characteristic lines. Third, despite the variance in quantities

purchased and expenditures, this class of snack foods appears to be a relatively small

expenditure for all types of households.
This latter finding suggests that snack food demands will not respond very much to

tax-induced price changes. If consumers pay more attention to taxes on large expenditures than on small expenditures, we could expect that consumers will treat a small ad

valorem tax as a trifle.

Almost everyone purchases some snack foods. Data show that over the course of a

year, about 91 percent of households purchased potato chips (table 1). On average,

households that did purchase potato chips purchased 9.8 pounds yearly and spent

about $26. Examining a somewhat wider class of snacks—all chips (potato, corn, and

tortilla)—shows an even larger share of households (about 96 percent) that purchased

snacks. There are other salty snacks besides chips: pretzels, cheese puffs, microwave

popcorn, and nuts (packaged and bulk). These snacks were purchased by 96.8 percent

of households. Considering all salty snacks, 99 percent of households purchased some,

on average spending $76 yearly on 31.8 pounds. The per capita quantity purchased

was 14.5 pounds.

Of course, not all households are average. Figure 1 shows the distribution of household consumption of all salty snacks in 1999. Each bar represents the percentage of

households for which annual purchases of all salty snacks fell in a particular 2-pound

interval, say 8-10 pounds. The modal (most typical) purchase level is 10-12 pounds.

The distribution is skewed as the modal purchase level falls below the average. The

long right tail of the distribution shows that a small fraction of households purchase

relatively large quantities. At ever-diminishing levels, the tail extends far beyond what

5

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Table 1—Salty snack consumption and expenditures, 1999

Snacks Share of Average quantity Per capita Average 

households purchased by quantity expenditures by

that households that did purchased by households that 

purchased purchase households that did purchase 

snacks (pounds) did purchase 

(percent) (pounds)

Potato chips 91.3 9.76 4.18 $26.14

All chips 95.5 16.34 7.00 $41.43

Other salty snacks 96.8 16.47 7.92 $37.41

All salty snacks 99.2 31.81 14.47 $76.39

Source: Tabulations from ACNielsen Homescan panel, 1999.

Figure 1

Percentage

Percentages of households purchasing salty snacks, 

by quantity, 1999

Source: Tabulations from ACNielsen Homescan panel, 1999.

07

1523313947556371798795

103111119127135143

>150

0

1

2

3

4

5

6

Pounds
is reported in figure 1. The rightmost bar (0.37 percent of households) represents all

households purchasing 150 pounds or more.

Although almost all households purchase salty snacks, there are systematic differences

in expenditures and quantities purchased among households with different socioeconomic characteristics.

Household size

There is a strong relationship between salty snack quantities purchased and household

size—larger households purchase more than smaller households (fig. 2). However, per

capita quantities purchased decrease with household size, indicating that household consumption does increase with household size, but at a decreasing rate. This pattern of

purchases is explained by figure 3. We tabulated quantities purchased by households

with children age 6 and above (denoted as households with children3) and all other

households. Salty snack purchases in households with children (45.1 pounds) are 60

percent higher than households without children (28.1 pounds). However, in per capita

terms, households with children consume 32 percent less than those without children. In

effect, households usually increase in size by adding children and children eat less salty

snack foods than adults.

Race and ethnicity

Panel households were asked to identify their race and ethnicity. We used those

responses to classify households into four broad categories: non-Hispanic White, nonHispanic Black, Hispanic, and Asian.4 Race/ethnicity is associated with expenditures

and quantities purchased of snack foods. Non-Hispanic White households purchased

the largest quantity of salty snacks, followed by Hispanic and Asian households,

respectively (fig. 4). Non-Hispanic Black households purchased the lowest quantity of

all salty snack foods. In per capita terms, the order differs. Hispanic households purchased less than Asian households. This difference may reflect family size choices

rather than differences in food preferences. Hispanic households in the sample tended

to have larger families (3.3) than Asian households (2.4).

6

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4We do not report on the group that selected

“other” for race.

0

20

40

60

12 3456789

Figure 2

Household and per capita quantities of salty snacks

purchased, by household size, 1999

Pounds

Household size

Source: Tabulations from ACNielsen Homescan panel, 1999.

Per capita

Household

3Panel households indicated whether they had

children in any of three categories: less than 6

years of age, 6-12 years of age, or 13-18 years

of age. For the purpose of distinguishing

households with and without snack-eating

children, we selected the 6-12 and 13-18 years

of age categories to represent households with

children. The less than 6 years of age category

clearly includes some very young children

who would not be eating salty snack foods.
Household income

Panel members were asked to identify household income by selecting one of 16

income ranges.5 In Figure 5, we identify the midpoint of each range and, for each

income range, show household and per capita quantities purchased of all salty snacks.

While quantity purchased increases with income, per capita quantity purchased is not

associated with income. Similarly, household expenditures on salty snacks increase

with income; there appears to be at most a weak relationship between per capita expenditures and income (fig. 6). Per capita quantity purchased and expenditures peak at an

income level of $37,500.

Although there is a systematic variation in snack food consumption and expenditures by

household size, race/ethnicity, income, and other socioeconomic factors, expenditures on

snack foods constitute a very small fraction of household income. For example, for the

income group with the highest per capita expenditures on snack foods ($37,500), household and per capita expenditures on all snacks are 0.2 and 0.1 percent of income, respectively. For the income group with the highest household expenditures on snacks

($80,000), household expenditures on snacks are 0.1 percent of the household income.

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Figure 3

Pounds

Household and per capita quantities of salty snacks purchased, 

by households with and without children, 1999

Source: Tabulations from ACNielsen Homescan panel, 1999.

50

40

30

20

10

0

With children Without children

Household Per capita

Figure 4

Pounds

Household and per capita quantities of salty snacks purchased, 

by race/ethnicity, 1999

Source: Tabulations from ACNielsen Homescan panel, 1999.

Asian

0

10

20

30

40

Non-Hispanic

White

Hispanic Non-Hispanic

 Black

Household Per capita

5Respondents were offered 16 ranges, e.g.,

under $5,000, $5,000-$7,999, $8,000-$9,999,

$100,000 and over. We treated each observation as the midpoint of the range, with the

upper range identified as $100,000.
Simulating Diet, Health Outcome, and Tax Revenue Impacts

Taxes might or might not influence dietary choices. The magnitude of the influence

depends on the size of the tax, how difficult it would be for resources used in manufacturing and distributing snacks to move to an untaxed sector, and how responsive consumer

demands are to taxes. For simplicity and illustrative purposes, we suppose the entire tax is

passed forward to consumers. The impacts on quantity of snacks purchased, (and thus on

consumer diets) and tax revenues depends on consumer responsiveness to prices (including taxes) and the size of the tax.

8

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Figure 6

Household and per capita expenditures 

on salty snacks, by income group, 1999

Dollars

Source: Tabulations from ACNielsen Homescan panel, 1999. 

Household income ($ thousand)

2.5 9 13.5 22.5 32.5 42.5 55 80

0

20

40

60

80

100

Household

Per capita

Figure 5

Household and per capita quantities of 

salty snacks purchased, by income group, 1999

Pounds

Source: Tabulations from ACNielsen Homescan panel, 1999. 

2.5

0

10

20

30

40

50

Household income ($ thousand)

Household

9 13.5 22.5 32.5 42.5 55 80

Per capita
Table 2 shows the calculated effects of different tax rates for different measures of consumer responsiveness to prices. Price elasticity of demand—percentage change in quantity

demanded per percentage change in price—takes three levels. We examine the possibility

that quantity demanded is very unresponsive to price changes (very inelastic

demand—price elasticity of demand = -0.2); quantity demanded responds less than proportionately to price changes (inelastic demand—price elasticity of demand = -0.7); and

quantity demanded responds equiproportionately to price changes (unitary elastic

demand—price elasticity of demand = -1.0).6 We examine 4 possible ad valorem tax

rates: 0.4, 1, 10, and 30 percent. The first is nearly equivalent to the Jacobson and

Brownell proposal of a 1-cent-per-pound tax. Thus, we examine 12 possibilities for tax

rates and consumer price responsiveness.

We use baseline information from the panel on average annual price paid and average

per capita quantity purchased across the entire year for each of the 12 cases. Assuming

that all purchases are consumed and that other foods would not be substituted for salty

snacks allows us to calculate changes in caloric intake (although probably overestimated). We assume salty snacks average 150 calories per ounce.7 And, at 3,500 calories per pound of body weight (American Dietetic Association, 2003), we can calculate

tax-induced reductions in body weight (again, probably overestimated). Data on per

capita expenditures on salty snack foods, price elasticity of demand, and tax rates are

sufficient to calculate taxes paid by each individual. We use the U.S. Census population estimate to calculate total tax revenue collected.

Table 2 shows that salty snack consumption decreases as the tax rate and price elasticity of demand increase, exactly as expected. For the two lowest tax rates of 0.4 and 1

percent, calculated reductions in annual purchases are negligible, ranging from 0.19

ounce per year to 2.32 ounces per year, depending on the elasticity assumption. Even

when we consider impacts on the relatively small number of households purchasing

extremely large quantities—say five times the average quantity (see figure 1), scaling

up all the tax impacts by a factor of five—the tax from these two rates amounts to

$0.70-$1.75 per person per year.

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6Our own research points to elasticity estimates ranging from -0.2 to -0.7. See, “Taxing

Snack Foods: Manipulating Diet Quality or

Financing Information Programs?” forthcoming in Review of Agricultural Economics, Vol.

27, No. 1, Spring 2005.

7Most chips are labeled as 150 calories per

ounce. Peanuts are labeled as 165 calories per

ounce and other nuts labeled higher. Pretzels

and microwave popcorn are around 110 calories per ounce, but can carry more calories.

Table 2—Tax-induced reductions in annual quantity purchased and taxes collected for various price

elasticity and tax rate assumptions 

Tax rate Reduction in Reduction in Reduction in body Tax paid U.S. total tax

(percent) ounces purchased calories consumed weight (pounds) (dollars) (million dollars)

-----------------------------------------Per capita----------------------------------

Very inelastic

demand (0.2)

0.4 0.19 28 0.01 0.14 40.8

1.0 0.46 69 0.02 0.35 101.9

10.0 4.63 695 0.20 3.44 1,000.6

30.0 13.89 2084 0.60 9.90 2,879.3

Inelastic demand

(-0.7)

0.4 0.65 97 0.03 0.14 40.7

1.0 1.62 243 0.07 0.35 101.4

10.0 16.21 2431 0.69 3.27 949.6

30.0 48.62 7292 2.08 8.32 2,419.8

Unitary elastic

demand (1.0)—

revenue constant

0.4 0.93 139 0.04 0.14 40.7

1.0 2.32 347 0.10 0.35 101.1

10.0 23.15 3473 0.99 3.16 918.9

30.0 69.45 10418 2.98 7.37 2,144.2

Source: Economic Research Service/USDA.
For the two lowest elasticity assumptions and the two lowest tax rates, calories and body

weight reductions are close to zero. The calorie and body weight impacts are likely overestimated because we assumed the tax would be entirely passed forward to consumers.

We can conclude that, for these cases, taxes would not appreciably alter diet quality or

health outcomes. The cases do suggest that tax revenues would, however, be

positive—approximately $40 million per year for the 1 cent per pound tax (0.4 percent)

and $100 million for the 1-percent tax. 

At higher tax rates (10, 30 percent), impacts are likely overestimated. When taxes increase

to 10 or even 30 percent and the effective price the consumer pays increases, other foods

may begin to look more attractive. That is, an inelastic demand is unlikely to be very

inelastic over a wide range of price increases. Consumers might substitute untaxed foods

for snack foods, leaving average taxes paid and total taxes collected smaller than

estimated in table 2. Further, if consumers substitute untaxed foods for taxed snack foods,

the reductions in calories consumed and body weight will also be overestimated.

Conclusion

The public health and economic efficiency approaches to choosing a role for government often reach opposite conclusions. From the public health perspective, the potential for illness or injury is sufficient to justify government action; large numbers of

deaths or illnesses are more compelling reasons for government action. The dollar

value of benefits and costs derived from government programs does not necessarily

enter the public health decision calculus. Alternatively, economic efficiency demands

that proposed government programs clear two hurdles. First, there must be an efficiency problem for government to solve. Second, a corrective program must be worth

the cost.

So far, economists have not reached a consensus on whether obesity raises economic

efficiency problems. If obesity results from informed individuals’ willingly making

diet and lifestyle choices, there is no way to argue for inefficiency; we have to conclude that many are willing to accept extra weight because the cost of diet and exercise

is too high. On the other hand, arguments for intervention could be mounted on the

basis of imperfect information about the relationship between diet and health. Nevertheless, many in the public health community have proposed interventions, and taxing

snack foods has been advocated frequently. But, without a clear statement of the efficiency problem caused by overweight and obesity, we cannot say whether such taxes

might increase or decrease economic efficiency—i.e., whether benefits exceed costs.

Our calculations suggest that imposing taxes on the order of 1 cent per pound—as suggested in the literature—is unlikely to have much influence on consumer diet quality

or health. Despite not knowing exactly how consumers might respond to higher prices

for salty snacks, we did show that relatively lower tax rates imply a very narrow range

for tax revenues—approximately $40 million for the 1-cent-per-pound tax rate and

$100 million for the 1-percent rate.

No snack tax proposal includes detailed operation plans. Thus, our tabulations are limited. Some proposals suggest earmarking tax revenues for information programs, but

none have specified how they would try to convince consumers to make different

dietary choices. Our estimates of dietary impacts may, therefore, be incomplete.

Incompleteness does not mean our estimates are too low. We found that the lower tax

rates yield virtually no diet impacts. Adding an information program might increase

diet impacts, but that conclusion is far from certain. A short-term program that would

be widely used and offer long-term weight reduction has so far eluded the private sector despite huge financial incentives. Food advertisements on children’s television programs are repeated frequently, indicating that food manufacturers believe the effectiveness of this information decays very rapidly. Hence, it is possible that a new program

would have no effect on diet quality. An information program with demonstrable

health benefits may need an entirely different approach in order to be effective.

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References

American Dietetic Association. A Simple 100 Calories a Day Can Be the Difference in

Weight Maintenance Versus Gain or Loss. (October 2003). Available at

http://www.eatright.org/Public/NutritionInformation/index_17622.cfm.

Battle, E.K., and K.D. Brownell. “Confronting a Rising Tide of Eating Disorders and

Obesity: Treatment Vs. Prevention and Policy.” Addictive Behaviors. 21(1996):

755-65.

Epstein, R.A. “Let the Shoemaker Stick to His Last: A Defense of the ‘Old’ Public

Health.” Perspectives in Biology and Medicine. 46(Summer 2003):S138-59.

Flegal, K.M., M.D. Carroll, C.L. Ogden, and C.L. Johnson. “Prevalence and Trends in

Obesity Among US Adults, 1999-2000.” Journal of the American Medical Association.

288(October 9, 2002):1723-27.

Jacobson, M.F., and K.D. Brownell. “Small Taxes on Soft Drinks and Snack Foods to

Promote Health.” American Journal of Public Health. 90(June 2000):854-57.

Marshall, T. “Exploring a Fiscal Food Policy: The Case of Diet and Ischaemic Heart Disease.” British Medical Journal. 29(January 2000):301-04.

Nestle, M. Food Politics: How the Food Industry Influences Nutrition and Health. Berkeley and Los Angeles, CA: University of California Press, 2002.

Ogden, C.L., K.M. Flegal, M.D. Carroll, and C.L. Johnson. “Prevalence and Trends in

Overweight Among U.S. Children and Adolescents, 1999-2000.” Journal of the American Medical Association. 288(October 9, 2002):1728-32.

U.S. Department of Health and Human Services. Public Health Service, Office of the Surgeon General. “The Surgeon General’s call to action to prevent and decrease overweight and obesity.” Rockville, MD. 2001.

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UNITED STATES DEPARTMENT OF AGRICULTURE

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National Agricultural Library Cataloging Record:

Kuchler, Fred

Taxing snack foods : what to expect for diet and tax revenues.

(Current issues in economics of food markets ; no. 747-08)

(Agriculture information bulletin)

1. Snack foods--Taxation--United States. 2. Weight loss--United States.

3. Food habits--Economic aspects--United States.

4. Tax revenue estimating--United States. I. Tegene, Abebayehu.

II. Harris, J. Michael. III. United States. Dept. of Agriculture. Economic Research Service. 

IV. Title.

HJ2362

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ECONOMIC RESEARCH SERVICE

UNITED STATES DEPARTMENT OF AGRICULTURE

www.ers.usda.gov

United States Department of Agriculture

Economic Research Service

1800 M Street, NW

Washington, DC 20036-5831

About this Series

Current Issues synthesizes economic analyses of the complex

relationships in food markets of interest to officials responsible

for public policy, decisionmakers in the industry, and

researchers. Future topics may include the increasing vertical

coordination and integration of the industry; expanding consolidation and concentration of food industries; higher minimum

wage and its effects on food prices; expansion of non-traditional

retail outlets and the food-away-from-home market; and the

changing attributes of available food such as wider choices, better labeling information, greater time savings, and improvements

in nutritional characteristics.

Electronic copy is available on www.ers.usda.gov.

Available in this Series

How Do Taxes Affect Food Markets?

By Patrick Canning (pcanning@ers.usda.gov) and 

Marinos Tsigas 

Several food market indicators would change if a flat income tax

system—that is, a system without exemptions, deductions, credits, and deferrals—replaced the current system. Our findings

support the widely held view that even though a flat income tax

system would increase national income, gains for consumers

would be only modest. Nor would economic growth be universal. A federal flat tax structure would lead to smaller farm industries with lower than average growth rates, larger food industries

with higher than average growth rates, slightly lower food production costs and consumer food prices, reduced net farm

exports, and reduced net food imports. If States were to enact

similar reforms, consumer food prices would drop 2.2 percent

overall and over 5 percent in the Delta, Appalachian, and Southern Plains regions. Some of these indicators vary substantially

by region.

www.ers.usda.gov/publications/aib747/aib74704.pdf

September 2000

A Comparison of Vertical Coordination in 

the U.S. Poultry, Egg, and Pork Industries

By Steve W. Martinez (martinez@ers.usda.gov)

Changes in vertical coordination in the U.S. broiler, turkey, and

egg industries decades ago may provide useful insight into more

recent developments in the U.S. pork industry. The need to protect relationship-specific investments created incentives for contracts and vertical integration. In the presence of relationshipspecific investments, market uncertainty from a number of

sources helped determine the type of contract/vertical coordination alternative selected.

www.ers.usda.gov/publications/aib747/aib74705.pdf

May 2002

Consolidated Markets, Brand Competition,

and Orange Juice Prices

By James Binkley, Patrick Canning (pcanning@ers.usda.gov),

Ryan Dooley, and James Eales 

This paper examines how consolidation in the marketing system

affects prices for orange juice. We isolated the pricing behavior

of brand marketers, wholesalers, and retailers by observing the

retail prices for specific orange juice products, including leading

national brands and private label brands, in 54 U.S. markets over

a 1-year period. The data provided little compelling evidence

that consolidated markets engaged in non-competitive pricing

behavior. Increased brand competition, particularly between private labels and leading national brands, did, however, appear to

lower average market prices.

www.ers.usda.gov/publications/aib747/aib74706.pdf

June 2002

Exploring Food Purchase Behavior of Low-Income

Households: How Do They Economize?

By Ephraim S. Leibtag (eleibtag@ers.usda.gov ) and Phil R.

Kaufman (pkaufman@ers.usda.gov )

This report compares food purchases by U.S. households of different income levels and finds that low-income shoppers spend

less on food purchases despite some evidence that they face generally higher purchase prices. Households can economize on

food spending by purchasing more discounted products, favoring

private-label (generic) products over brand, pursuing volume discounts, or settling for a less expensive product (for example, less

lean beef) within a product class. A 1998 sample of foodstore

purchase data shows that low-income households adhere to these

practices when possible, but that the typically smaller size of

foodstores in urban and rural locations (compared with suburban

locations) may sometimes preclude them from doing so.

www.ers.usda.gov/publications/aib747/aib74707.pdf

June 2003