Two years ago, the cafeteria of Boston’s 700-bed Brigham and Women’s Hospital was turned into a laboratory for a social experiment. Staffers raised prices on regular soft drinks 35 percent. Hit with the temporary soda tax, sales promptly dropped 26 percent.
The idea of soda taxes is percolating in city councils and state legislatures as a possible way to raise revenue and plug budget deficits. That means the concept of “elasticity,” or the resilience of sales when prices rise, is more than an academic exercise for soft drink companies such as Coca-Cola and PepsiCo.
A penny-an-ounce tax on soft drinks, like the one contemplated briefly in New York State earlier this year, could lead to big price increases. (The price of a 24-pack could rise to about $9, assuming a starting price of $6, if the entire cost was passed along to consumers, for example.) The New York tax was defeated in a flurry of lobbying by the beverage industry, and similar proposals in other states have generally failed to gain traction.