Is Berkeley’s New Soda Tax a Tipping Point or an Outlier?

Health advocates say it’s just the beginning. Soda industry officials say it’s an anomaly and won’t amount to much.

Assessing the impact of Berkeley becoming the first city in the nation to tax sugary drinks depends on your perspective.

By a significant margin — more than 75% — voters last week approved a penny-per-ounce tax on most sugar-sweetened beverages sold in the city. The goals, proponents say, are to discourage consumption of such drinks and generate money to combat obesity and diabetes.

“It’s always hard to predict these sort of things but I would point to two things that have a bearing,” said Allen Kanner, a Berkeley psychologist and supporter of the tax.

“First, one of the more telling statistics is what the soda industry spent to fight this measure,” Kanner said. The American Beverage Association spent about $2.3 million to combat the measure — roughly $30 per registered voter. Proponents spent about $564,000.

“That was far and away the most spent ever on any election in Berkeley. That gives you a sense of the concern. I think they thought it was worrisome enough to spend real money to defeat it,” Kanner said.

“And secondly, I think one of the significant outcomes of this is that we’ll now be able to assess the claims that are made that it will be horrible for small businesses,” Kanner said. “Future campaigns will be able to use data to show what actually happens in Berkeley and I think the data will show that a lot of the soda industry predictions about the harm to business were a lot of baloney,” Kanner said.

Roger Salazar, president of a Sacramento media relations firm hired to represent soda interests in the Berkeley campaign, said his employers aren’t worried the taxing trend will spread.

“Similar measures have been tried in 30 different states and cities and every one of them lost,” Salazar said. “But Berkeley is a different animal altogether. The political makeup and business community is unlike other places. It’s not representative of the rest of the country. It’s not even representative of the Bay Area,” Salazar said, pointing to a similar ballot measure that lost last week across the bay in San Francisco.

Tipping Point or Outlier?

Proponents of the new tax point to the city’s history as a social policy trendsetter and widespread interest in the successful campaign as signs that taxing sugary drinks will grow beyond the city’s borders.

“In the days after the election, we heard from a lot of cities across the United States — representing at least a quarter of the states and some international interest as well,” said Sara Soka, campaign manager for Measure D.

“People are certainly watching, and now that one city has done it, and Mexico passed this at the national level last year, people are realizing that it is possible.”

A one-cent-per ounce tax on sugary beverages went into effect Jan. 1 in Mexico.

Soka and many proponents of taxing sugary drinks compare the effort to taxing tobacco several decades ago.

“The movement to fight big tobacco started on the local level and that’s what’s happening with big soda,” Soka said.

Soka said Berkeley’s history as a trend setter suggests more taxes on sugary drinks.

“What happens in Berkeley in public health and social policy tends to spread. Berkeley was one of the first places to have smoke-free restaurants in the early ’70s, the first to have curb cuts for wheelchairs and the city has been a leader in school food policies setting minimum criteria for nutrition,” Soka said.

Simple Majority vs. Two-Thirds Majority

Although it passed at a higher threshold, Berkeley’s Measure D needed only a simple majority to win. Measure authors, using a provision included in Proposition 13 passed 36 years ago, designated the sugary drink tax as a general fund tax not a targeted tax to generate money for specific programs. Taxes going into a city or county’s general fund need only a simple majority to pass. Targeted taxes need two-thirds approval to win.

The soda tax in San Francisco last week and a similar tax on the Richmond city ballot two years ago were targeted taxes and needed two-thirds majority.

“It took a lot of discussion to come to that agreement,” Soka said. “As part of the measure, we were able to include the creation of a panel of experts who will advise the city on how best to spend the tax money. We had the unanimous support of the council for this measure,” Soka said.

The Berkeley tax, expected to generate more than $1 million a year, will be levied on distributors of sugary drinks, not retailers.

“There are different ways to write these ordinances,” Soka said. “One of the main reasons for taxing distributors is that way it’s considered an excise tax and is much easier to implement and to collect. The tax is added on to their business license fee.”

Soka said taxing distributors made sense on another level, as well.

“Rather than working on the retail level that would be much harder to implement, distributors are a lot closer to the industry, which is really the group we’re hoping to influence. Maybe distributors will be more likely to carry more options that would have less sugar and be healthier for people,” Soka said.

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