Is California Planning A Statewide Sugar Tax?


Liam Sigaud Writer for the American Consumer Institute
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Attacks on consumer sovereignty are underway all across the country as politicians attempt to micromanage consumers’ dietary decisions through the tax code.

One measure in particular has been adopted by a growing number of localities. So-called “sugar taxes” impose punitive costs on consumers purchasing sweetened beverages like soda, iced tea, and energy drinks.

Imposing an onerous tax on a particular category of food or beverage constitutes an infringement on our freedom to choose what we eat and drink, and consumers shouldn’t stand for it.

The goal, proponents argue, is to discourage the consumption of unhealthy beverages that contribute to obesity and other health problems. But research has generally found that these taxes’ impact on key health metrics is minimal, simply because consumers tend to turn to other calorie-rich substitutes when the price of sugary drinks goes up, resulting in little change to their overall calorie intake.

But while the purported health benefits of sugar taxes are scarce, their adverse effects are apparent in the U.S. cities that have implemented them over the last several years.

Philadelphia, for example, was one of the first cities in the U.S. to pass a sugar tax back in 2016. On a 24-oz drink costing $1, the tax is 36 cents, adding up to about $42 per year for the typical family. Since its implementation last year, evidence of its failure has been dramatic.

Cross-border shopping has surged as consumers go out of their way to avoid the tax, squeezing many of Philadelphia’s community gas stations and grocery stores, which are seeing sales plunge.

Sagging tax revenues, more than a thousand jobs lost, damage to the city’s economic growth, and higher financial burdens on the city’s neediest residents are just some of the other negative effects documented since Philadelphia’s tax took effect.

But Philadelphia isn’t alone. Seattle enacted a sugar tax at the start of this year, with similar results. Costco has even encouraged its customers to shop outside the city to avoid the tax, which has sent the cost of a case of Gatorade soaring from $15.99 to $26.33 — a 65-percent surcharge.

Several cities in California have enacted sugar taxes, too, including Berkeley (which was the first city in the country to pass a sugar tax in 2015), San Francisco, and Oakland.

But in June, lawmakers in Sacramento, with the support of Gov. Brown, passed legislation, Assembly Bill 1838, that bans cities and counties from imposing any additional taxes on sodas and other sugary drinks for the next 12 years (the cities with taxes already in place are allowed keep them).

This would be joyous news if the motivation behind the bill had been to protect consumer sovereignty and personal freedom. Alas, the lawmakers who supported the bill did so for purely strategic reasons: they knew that if they didn’t pass the ban, a voter initiative coming this fall could have made it much harder to local governments to raise taxes in the future. In exchange for the soda tax ban, the voter initiative was withdrawn.

The new law, however, leaves open the possibility of establishing a statewide sugar tax, and many California legislators appear supportive of the idea. The detrimental economic impact of such a measure would be substantial, pushing Californians’ tax burden (already one of the highest in the nation) to new heights.

Whatever lawmakers in Sacramento are planning, Californians concerned about the prosperity of their state should strongly oppose any attempt to pass a statewide sugar tax.

Liam Sigaud writes for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.