Soda Taxes Pass In Four Cities, Dealing Blow To Big Soda

Four cities in the United States, including three in the Bay Area, handily approved soda taxes on Tuesday, adding momentum to a growing public health sentiment against sugary drinks and dealing an unexpected blow to the beverage industry.

CocaCola and Pepsi must now accept a penny-per-ounce tax on soda and other sugar-sweetened beverages in Oakland, San Francisco and Albany, in addition to a two-cent tax in Boulder, Colorado. About $50 million was spent on marketing for and against the taxes in Oakland and San Francisco, with the American Beverage Association spending nearly $30 million and proponents, including former New York Mayor Michael Bloomberg, spending about $20 million.

Before this week, such taxes were only on the books in Berkeley, which last year became the first city in the U.S. to implement a soda tax, and Philadelphia, which passed its tax law in June. Since 2009, cities or states have tried and failed to pass similar taxes about 40 times; Cook County, Illinois, will vote on a similar measure on Thursday.

Many public health researchers are in favor of these taxes. By charging more for soda, they argue, customers will be discouraged from buying it, and lower their risk for diabetes, obesity, tooth decay, and other conditions linked to high sugar consumption.

“This reflects a shift in the public’s understanding of the risk of drinking sugary drinks,” Michael Long, an assistant professor who studies community health at George Washington University, told BuzzFeed News. “In the scientific community, we’ve known it’s been harmful for many years. But the message has finally gotten out that sugar kills you and kills you early.”

In fighting the tax proposals, the American Beverage Association sought to avoid a symbolic fate similar to the tobacco industry’s. On Wednesday, the organization said that it respected voters’ decisions.

“Our energy remains squarely focused on reducing the sugar consumed from beverages — engaging with prominent public health and community organizations to change behavior,” it said in a statement. “We’re driving this change across America, including communities with the highest rates of obesity. It’s the hard work necessary for true and lasting change.”

The proposals will apply to beverages that contain added sugars such as sucrose, fructose, glucose, and high-fructose corn syrup. No taxes will be added to diet soda, milk products, 100% fruit or vegetable drinks without sweeteners added, baby formula, medical beverages such as rehydration drinks, or alcohol.

The tax is expected to raise $15 million a year in San Francisco, $6 million in Oakland, $223,000 in Albany, and $3.8 million in Boulder. In each, the money will go to the city’s general budget. San Francisco and Oakland are required to create advisory boards that would recommend how to spend that money, and Albany must also get public input on how to spend it. Boulder is required to put it toward health and wellness programs within the city.

Each city will get the tax money directly from the distributor, the middleman between the soda manufacturer and a supermarket (or in the case of a mom-and-pop shop, the business owner himself). To recoup the increased cost, the distributor could charge a grocer more for the sodas, and the grocer could in turn charge customers more for the sodas. But opponents argue that, in practice, grocery stores could simply charge slightly more for all products they sell instead of increasing only the soda prices.

That hasn’t actually happened in Berkeley, however, according to UC Berkeley researchers who have studied the policy. One study found that, among more than 30 stores surveyed, the vast majority did charge more for sugary drinks in the first few months after the ordinance took hold in the spring of 2015.

Some stores, however, also charged more for diet sodas, a finding also confirmed by researchers at Cornell University and the University of Iowa. One quirk of the tax is that it’s not supposed to apply to diet sodas — but business owners can choose what to charge more for in order to recoup their costs, and that can include diet sodas.

This practice was in place at just a handful of the stores surveyed. Still, the study suggests that cities with these taxes will have to monitor how grocers adopt the mandate.

“The job doesn’t end when these initiatives get more than 50% at the polls,” Cornell professor John Cawley told BuzzFeed News. “The details of implementation really matter.”

The beverage industry had also argued that a soda tax is regressive, disproportionately affecting the low-income people and minorities who tend to be heavy soda consumers.

But researchers say that’s the case because the industry more heavily markets to those communities, which in turn end up with higher rates of diabetes and obesity. Another study from the UC Berkeley team, which surveyed about 2,700 people, including residents of low-income neighborhoods, found that consumption of sugary drinks fell 21% in Berkeley after the tax took effect.

“It’s not regressive if all of the people change their purchase habits and don’t buy sugar-sweetened beverages,” said Kristine Madsen, an associate professor at UC Berkeley’s public health school and one of the researchers who has been studying the issue. “We think that any tool that actually supports significant change, particularly in low-income communities, is a really important tool.”