Combining food taxes and subsidies can lead to healthier grocery purchases for low-income households

April 9, 2024

You’ve likely heard of “sugar taxes” on sugar-sweetened beverages like sodas and sports drinks. But what should happen with the money raised by these taxes? A new study published in the American Journal of Preventative Medicine explores the effects of combining a sugar-based tax on beverages with targeted subsidies for minimally processed foods and drinks.

Researchers at the University of North Carolina at Chapel Hill developed a model to simulate what would happen if national-level taxes on less healthy, ultra-processed foods and beverages were used to fund subsidies for members of low-income households participating in food assistance programs to spend specifically on fruits, vegetables, healthy proteins and unsweetened drinks.

They found that this combined policy scenario would likely lead low-income households to improve the nutritional quality of their grocery purchases without increasing their overall costs or negatively impacting consumer satisfaction.

Targeted taxes already have been proven to reduce the purchase and consumption of sugary drinks, which could potentially save millions of years of life globally by reducing chronic diseases caused by excess sugar and calories. However, while more than 60 countries and smaller jurisdictions worldwide have implemented health-focused sugary drink taxes, relatively few have earmarked the revenue raised to subsidize healthy food purchases.

In the United States, studies evaluating programs that provide additional cash benefits for food assistance participants to spend on fruits and vegetables consistently find that they increase consumers’ purchase and intake of targeted products. The new study’s findings support a novel policy approach, combining both policy types to expand low-income households’ access to additional healthier alternatives.

Dr. Shu Wen Ng (Photo by Jon Gardiner/UNC-Chapel Hill)

“Our findings show that we can support healthier dietary patterns in the U.S. by directing revenues from national taxes on ultra-processed products high in sugar, sodium and/or saturated fats toward additional benefits to help low-income households purchase more fruits, vegetables and other healthier alternatives,” said author Shu Wen Ng, PhD, Distinguished Scholar in Public Health Nutrition at the UNC Gillings School of Global Public Health and co-director of UNC’s Global Food Research Program.

Dr. Pourya Valizadeh

“This is an equity-enhancing approach that sends a clear and consistent message to the public and the food industry on the overarching goal of improving dietary patterns and nutritional security,” added co-author Pourya Valizadeh, PhD, who completed the research during a postdoctoral fellowship with the Global Food Research Program. “The taxes should not be primarily about generating revenue, but rather shifting the relative prices of unhealthy versus healthy foods so that lower-income families can more reliably attain foods and beverages that support health.”

The co-authors hope that the study findings will inform decisions on recent congressional bills, including the “GusNIP Expansion Act” and the “Opt for Health with SNAP (OH SNAP) Close the Fruit and Vegetable Gap Act,” which aim to levy taxes on unhealthy beverages and expand targeted subsidies beyond existing SNAP benefits.

Contact the UNC Gillings School of Global Public Health communications team at sphcomm@unc.edu.