Snack Industry May Face Tax

Published online: Oct 29, 2004 ERS
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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 overwight in the United States.

The notice was made October 29 by the Economic Research Service in a news release on Diet, Consumption and Health.

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 informational 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, the ERS examined how much salty snack purchases might be reduced under varying excise tax rates and possible consumer price responses. It was found that even a 1 percent ad valorem tax would not appreciably alter consumption--and, thus, would have little effect on diet qualilty or health outcomes--but would generate more than $40 million in annual tax revenues.

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