Critics Say Soda Tax Not Working as Billed; Proponents Say It Will Pay Off in Long Run

As money begins to roll in from the country’s first tax on sugary beverages, critics of the new Berkeley ordinance say the way the tax is being levied undermines one of its main objectives. Proponents say the tax will pay off in the long run.

About 75% of Berkeley voters approved the penny-per-ounce tax on sugar-sweetened beverages; the tax took effect March 1 and generated $116,000 in its first month. Berkeley City Council member Linda Maio estimated the tax will generate $1.2 million in its first year.

But where, exactly, is the money coming from? Not out of soda drinkers’ pockets, critics say, and they contend that means the tax isn’t working as proposed.

“A central tenet of the political campaigns to get these taxes passed is that the extra cost for soda will dissuade consumers from buying them,” said Roger Salazar, spokesperson for the California Beverage Association, the state’s largest opponent of sugary-beverage taxes.

“But from what we can see, the price of soda and other sugary drinks is the same in Berkeley as it used to be. There’s no difference between the price in Berkeley stores and stores in other East Bay towns,” Salazar said.

Salazar said grocers and other retailers are absorbing the new tax by raising prices on other products or by including it in other costs but not by charging customers more for sugary drinks.

A columnist for the Contra Costa Times found no differences in prices for soda in and out of the Berkeley city limits and asked the headline question: “If Berkeley shoppers don’t have to pay the soda tax, does it really exist?”

‘In This for the Long Haul’

Xavier Morales, executive director of the Latino Coalition for a Healthy California and a strong supporter of taxes on sugary drinks — which have been linked to an increase in diabetes and obesity — said critics are being short-sighted.

“If they’re framing this that all we’re trying to do is discourage consumption and, therefore, it might seem like we’re not reaching our goal, that’s missing the main point,” Morales said.

“Our goal the whole time was to get a revenue source whereby we could go out and do nutrition education and other community programs about how to eat and cook more nutritionally — have better healthy practices,” Morales said.

“We’re in this for the long haul. We want to change norms through education and opportunities for better health,” Morales said.

Berkeley City Council member Laurie Capitelli, who supports the tax, said it will discourage sugary drinks no matter who pays it.

“We’re not sure who is absorbing it,” Capitelli said. “It might be retailers or it could be distributors or it might be manufacturers. We heard early indications that Coca-Cola might do it.”

Capitelli said tax proponents were hoping the added cost would be passed on to consumers and act as a deterrent, but he said the tax will influence the marketplace no matter where it is levied.

“Whoever is absorbing it, this new cost will have the effect at some level of discouraging sugary drinks and encouraging alternatives,” Capitelli pointed out.

Capitelli agreed with Morales that the most significant impact of the new tax will come from new efforts it ends up funding.

“Our panel met for the first time last week, and we’re looking forward to getting programs under way,” Capitelli said.

Berkeley’s new Sugar-Sweetened Beverage Product Panel of Experts will advise the city council on spending the money. The council earmarked $250,000 from the new tax for use in the school district’s nutrition education program.

Tax Portrayed as ‘Impact Fee’

Morales and other proponents of taxing sugary drinks consider it a sort of ‘impact fee’ for what they contend is a major contributor to diabetes and obesity.

“I’m not even calling it a crisis anymore. It’s gone beyond that. Diabetes is so prevalent that you don’t even see it anymore,” Salazar said.

UCLA study released last year showed that almost one-third of all hospitalized Californians — no matter what they were in the hospital for — had diabetes.

Health officials estimate the disease costs the state’s health care system about $27 billion a year.

The disease hits communities of color harder, research shows. Amputation rates for diabetes patients are 10 times higher in low-income California communities than they are for the rest of the state, according to UCLA research

“Almost half the Hispanic children in California are expected to get diabetes in their lifetime,” Morales said. “I have two kids. One of them statistically should be getting diabetes eventually.”

“The causal link between drinking liquid sugar and diabetes is undeniable,” Morales said. “It makes sense to create a dedicated revenue source to get ahead of this disease.”

One group’s impact fee is another group’s “money grab.”

“We’ve thought from the beginning that this was just a money grab and would have no outcome on health outcomes,” Salazar said.

“We don’t think education or nutrition programs are going to have much impact, either. We do believe that diabetes and obesity are very big problems but they’re much more complicated and this sort of tax is not the right way to deal with it,” Salazar said.

Interest from Other Cities, Counties

Proponents say Berkeley officials have received several inquiries about the new tax from other cities and counties interested in pursuing something similar — including communities that have tried and failed.

“So far, 31 places have tried to do this and none had succeeded,” Morales said. “People are coming to us from other cities and saying, ‘How did you do it?'”

The Latino Coalition for a Healthy California is a co-sponsor of state legislation to levy a two-cent-per-ounce tax on sugary drinks. The bill — AB 1357, by Assembly member Richard Bloom (D-Santa Monica) — was shelved last month by the Assembly Committee on Health. Bloom plans to reintroduce it in January.

Related Topics

Insight Public Health