The Soda Tax: The Final Showdown?

by Molly Wharton
Berkeley and San Francisco gear up for what could be the last attempt to introduce a tax on sugary drinks.

San Francisco and Berkeley are aiming to become the first cities in the nation to pass per-ounce taxes on sugary drinks.

The California cities, which are two of the most progressive in the country, will likely be the last chance for the soda tax.

Larry Tramutola, who is managing the Berkeley campaign in support of the tax, knows the stakes are high. “The industry is really motivated to beat us here,” he told the Associated Press. “If they can beat us in San Francisco and Berkeley, nobody is going to take them on.”

The proposal in Berkeley would impose a one-cent-per-ounce tax on sugary drinks. It requires a majority of the vote to pass. In San Francisco, the tax would be two cents for every ounce, which means an additional $0.40 per bottle and $3.00 per twelve-pack. The San Francisco tax needs two-thirds of the vote to pass.

Of the 30 attempts at introducing taxes for sugary drinks around the country since 2009, none have succeeded. This includes attempts in New York City, Philadelphia, Maine, and Washington state.

But supporters of the tax in the California cities remain hopeful, saying they are better prepared than past campaigns have been.

Maggie Muir, a consultant who is leading the campaign in support of the soda tax, told National Review that previous campaigns failed because they “didn’t have a professional, well-orchestrated effort.” She explained that her campaign will run TV ads, mail fliers, and call voters to spread the message about the tax.

Muir also noted that the proposed tax in San Francisco is unique in that it would have the revenue collected from the soda taxes go to city and public-school nutrition, health, and fitness programs. The LA Times reports that the annual proceeds are estimated to be as much as $31 million.

“San Francisco is a unique city that really cares about the health of its citizens,” Muir said, noting that hundreds of volunteers have already signed up to help with the campaign. She also noted that merchants have been displaying signs in their windows promoting the tax, and that they have the support of the parents of the city and the public health community.

But the American Beverage Association seems ready for the fight. Roger Salazar, a spokesman for Californians for Food and Beverage Choice, which a group spearheaded by the ABA, told National Review that he is confident that the result will be the same as previous attempts. Though he does acknowledge that the ABA’s opponent is “very well organized,” he said that the city’s progressive nature is not a new challenge, explaining that most of the efforts at introducing taxes have been in progressive cities.

“It’s been voted down in location after location,” he told National Review, including two other cities in California, Richmond and El Monte.

To counter their campaign, Salazar says the ABA will “do as much education as possible” through the media and meetings with voters. They will show voters, he said, how the proposal will increase “the price burden for people in San Francisco and Berkeley, and place additional burdens on their businesses and cities.”

Tramutola told National Review that in these previous campaigns, it was “not a fair fight.” He said that the battles between the large ABA and small cities like El Monte was like “David versus Goliath.” He anticipates that the ABA will spend a large amount of money in the Berkeley showdown “as they do in every situation,” but is confident that voters will understand that the tax is “a smart and prudent thing to do.”

The tax will apply not only to sodas but also to juice drinks, sports drinks, iced teas, and other beverages. It does not include milk or natural fruit juices that do not contain added sugar. Muir said the tax is “one tool that will help people make healthier choices with what they drink.” She explained that soda and sugary drinks are the largest sources of sugar in the diet of Americans, and said they have a significant impact on obesity rates nationwide.

Tramutola said that “every bit of research not sponsored by the American Beverage Association” shows these drinks’ detrimental effects on people’s health.

In Mexico, Muir said, a tax on sugary drinks has reduced the consumption of the drinks by 5-to-10 percent. A similar tax in California would reduce the financial burden on the government, which pays directly and indirectly for the cost of obesity and diabetes, she said.

But Salazar argued that the tax “is trying to target one product for a problem that it has not necessarily been identified as the sole cause of.” He noted information from the CDC which showed that though the consumption of added sugars in Americans’ diet decreased substantially from 2000–2008, diabetes rates rose. “There’s much more to these health issues than blaming sugar drinks,” he said.

Indeed, a 2010 study which looked at the impact of soft-drink taxes on behavior and weight found that “the magnitude of the effect is small.”  A one-percentage-point increase in a state’s soft-drink tax rate led to a decrease in BMI of 0.003 points and a decrease of the obesity rate by 0.01 percentage points. It noted that while soft-drink consumption is indeed the single largest contributor of energy intake in the country, as Muir mentioned, it represents just 7 percent of total energy intake.

The study also looked at the effects of the tax across demographic groups, and found that it is regressive, affecting lower-income consumers to a greater degree than higher income ones.

“What you drink, what you feed your family is your choice,” Salazar said. Though he respects that the tax supports are trying to keep people healthy, he said, “taxing a common grocery item is not the way to change behavior.”

The pressure is on as both sides gear up for what some think is the final showdown. If the tax passes, Muir said, it will show the country “ this can be done, that the ABA can be beat back.”

But even if it fails, she does not believe that will mean the tax is a lost cause. “There is a nationwide movement that understands the harmful effects of sodas and other sugary drinks on people’s health,” she said. Even if it fails this time, “this movement is moving forward and it will happen in the next several years.”

Salazar and the ABA, on the other side, is confident that they will prevail once again.

“We think that the voters when they look at this [will] see that there’s nothing in either of these measures that will help,” he said. Instead, the tax would “make it harder for them to get by.”

Molly Wharton is an intern at National Review