The scientific evidence on the effect of sugar consumption on obesity has propelled policy makers in several states across the U.S. to propose the imposition of a tax on soft drinks. In this paper, we look at the effect of two tax events: a 5.5% sales tax on soft drinks imposed by the state of Maine in 1991, and a 5% sales tax on soft drinks levied in Ohio in 2003. We investigate this question by using sales data collected by scanner devices in Maine, Massachusetts, New York and Connecticut, as well as Ohio, Illinois, Michigan and Pennsylvania. These samples comprise stores that account for more than 80% of all grocery sales nationwide and include brand-level sales data for the periods of study. We employ a difference-in-difference matching estimator (DIDM) that, in our setting, permits the comparison among treatment and control groups based on brand identity. Results suggest that sales tax had a statistically insignificant impact on the overall consumption of soft drinks. This finding is robust to several alternative specifications, and over time.


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