Self-Appointed Food Police Think Additional Taxation On Sugary Beverages Is Smart. It’s Not
In some municipalities and states, local politicians play the role of unqualified dietitians as they seek extra taxes and revenues and as they pass judgment on what foods are suitable for the voters to consume.
A few years ago, public shaming focused on miscreants who like salt in their food, then it was restaurant-goers who weren’t obsessed with calorie counting. More recently, the municipal food-stylists are victimizing consumers who enjoy sugar-sweetened drinks, including classic sodas, energy drinks and sport drinks.
In 2015, a ballot initiative for Berkeley, CA was approved and a $0.01 tax per ounce of sugary soda was imposed, adding about $0.72 to each six-pack. A San Francisco initiative has also increased these unpopular taxes.
In 2013, a ballot initiative in Rhode Island tried to add a tax of $0.01 per ounce of sugar-sweetened drinks. The initiative failed, but Rhode Island legislators tried again for a $0.02 per ounce tax in 2017, and that failed, too. Legislators had dressed up the 2017 proposal as a way to pay for children’s health care, but most saw through that cynical ploy.
Cook County, Ill., had adopted a $0.01 tax on sugar-sweetened drinks, but the tax fell heaviest on low-income Chicagoans and opponents pushed for a repeal, which occurred in late 2017.
During 2015, the Vermont legislature considered H.24, a bill that would have imposed a $0.02 per ounce tax on sugar-sweetened drinks. The bill was read once and referred to the Health Committee, never to be seen again.
In Seattle, starting in 2018, a hefty tax of $0.0175 per ounce was imposed on sugar-sweetened drinks. Much to Seattle retailers’ chagrin, consumers are behaving rationally by driving to food outlets beyond Seattle’s taxing jurisdiction. One senior complained that this tax singled out the elderly who face an increased cost of sweated drinks, like prune juice.
The geographic avoidance of sugar taxes is also practiced in Philadelphia, where a $0.015 per ounce tax on sugar-sweetened drinks went into effect at the beginning of 2017, giving us a full year of data to consider. Philadelphia already carried an eight-percent state tax on soda. Now, the state legislature is considering pro-consumer legislation, HB 2241, which would repeal the Philadelphia tax to keep food and beverages are kept tax-free at the local level.
To obtain unbiased results from a year of sugar tax, Oxford Economics conducted an economic impact study. The study probed job creation and job losses, and sales of drinks and non-drink foods both in Philadelphia and in the neighboring jurisdictions. Many Philadelphians avoided the sugar tax by driving to adjacent jurisdictions, where they bought both soda and non-beverage foods.
Oxford documented the following sugar tax results: The net tax loss to Philadelphia related to the sugary drink tax for 2017 was $4.47 million, a humbling result compared to the $91 million gain that Philadelphia had expected from its new tax. Philadelphia merchant beverage sales in 2017 dropped by 27.7 percent and Philadelphia merchant non-beverage sales dropped by 6.1 percent. A total employment loss of 1,190 persons in Philadelphia resulted from sugar tax impacts on employment in bottling, transport and non-beverage grocery clerks.
Despite the confidence that local politicians sometimes feel in their prowess as dietitians and economists, they seem out of touch with voters and consumers. In their role as self-appointed food police, some local politicians think consumers are neither smart enough nor disciplined enough to make their own food choices. To coerce compliance with municipal diktats on approved food consumption, taxes and fines are liberally proposed but when consumers actually experience what politicians have in store for them, voters seldom swallow the bait.
In Berkeley, the tax did result in reduced sales for sugared drinks, but it also led to an increase in sugared drink sales outside of Berkeley. Moreover, while consumers purchased less sugared drinks in Berkeley, they increased their overall caloric intake by consuming higher caloric drinks like milk, yogurt smoothies and milkshakes, thereby defeating the intent of the tax.
It seems, case after case, every attempt to introduce a sugar drink tax has all been a failure. Places like Philadelphia and elsewhere should learn from these failures.
Alan Daley writes for the American Consumer Institute, a nonprofit educational and research organization.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.