Opinion, Berkeley Blogs

Berkeley's proposed soda tax would cut sugar intake, and that's a good thing

By Stephen Sugarman

The bottom line is that the proposed one-cent-per-ounce tax on sugar-sweetened beverages sold in Berkeley would reduce sugar consumption, and that would be good for the health of the population.

Were the measure to pass, it seems pretty clear that the tax would be passed on to consumers in the form of higher prices – 12 cents on a can of Coke, 20 cents on a 20-ounce bottle of Pepsi, and 64 cents on a two-liter plastic jug of 7-Up. Because these different containers currently tend to be priced from between 3 cents and 8 cents per ounce of soda, the price increase faced by consumers would vary between about 12 and 33 percent depending on what size they buy.

Based on studies of taxes imposed on products like gasoline and cigarettes, we can be reasonably confident that the Berkeley tax would in the short and medium term yield a reduction in sugar-sweetened soda consumption of at least 8 percent (although some recent scholarship on a broader-based sugar tax predicts a considerably greater quantity reduction).

To be sure, not all consumer responses to the price increase would be healthy ones. Some buyers would switch to equally sugary lower-price store brands (e.g. Kirkland cola), or to cheaper per ounce larger containers that they would not consume all at once. Still others would substitute spending on other sugary products like candies and ice cream. Moreover, some will go out of their way to purchase their sodas in nearby untaxed jurisdictions like Oakland or Albany, or will go out of their way to buy them from markets offering sodas at lower prices as compared with the mini-marts where they currently shop. Nevertheless, many others will simply consume less soda, and if they cut back enough to have money left in their pockets they will spend instead non-sugary substitutes.

Taking all of these responses into account, a not insignificant reduction would occur in the amount of sugar consumed by people living in Berkeley – and that would be good for public health. While there is ongoing controversy over whether saturated fat is really bad for you, or even whether salt is all that dangerous, there seems nearly universal agreement on the population health risks of too much sugar. Lower-income people who are likely to be disproportionately prodded to change their diets by the soda tax are also the group that is going to benefit most from the change. This is a critical fact to remember when faced with claims about the regressive nature of the proposed soda tax.

And, while it may be true that many so-called mom and pop grocers make a significant share of their profits from the sale of sugary drinks (as they may also from the sale of tobacco products), voting against the tax in order to protect those profits seems misguided. Instead, these shops should be helped to encourage their regular sugar-sweetened soda buyers to switch to buying healthier foods and drink instead. Such a shift would maintain these stores’ profits and make them healthier contributors to their neighborhood.

Demand for sugar-sweetened beverages today is importantly influenced by marketing campaigns (advertising and the like) which do more than merely battle over market share. Many unbranded healthy products like bulk fruits and vegetables do not enjoy these same promotional advantages. A tax on sugar-sweetened beverages can be seen as moving the market closer to where it would be in a world of fewer market imperfections. In this light, the proposed tax can be understood to be helping the market work better rather than unfairly picking out Coke, Pepsi and the like.

Don’t count on Berkeley spending the proceeds of the soda tax on public health campaigns promoting healthier eating. Across the nation, little of the tobacco tax revenues (or payments by the tobacco companies to governments under the so-called Master Settlement Agreement) are used to support tobacco control programs. Yet, if the new soda tax revenues go simply to support a range of regular city services – like police, fire, roads and parks, libraries, social services, and more – modest income households in Berkeley might well disproportionately enjoy the benefits. And, so, even if those households were to disproportionately bear the economic burden of the taxes, some would find that a fair enough quid pro quo.

From the public health perspective, the broader goal is to change social norms around eating, making empty-calorie sugar-sweetened sodas but an occasional drink and not the routine daily drink of way too many people. The proposed soda tax can push in that direction – and, indeed, by the discussions it is generating, it might do so whether or not it actually passes.

My own policy preference would be a plan based on the cap and trade approach to carbon emissions. California food retailers (both stores and chain restaurants) would be required to reduce the amount of sugar that passes through their cash registers by, say, 5 percent a year for five years. At the end of that period, Californians overall would be consuming about 25 percent less sugar as a result of a myriad of different changes that retailers would make – and many people might not even realize that they are consuming significantly less.

For more details, click here. But my proposal is not on the ballot, and so for another day. I won’t be voting for the Berkeley soda tax, but that’s because I live in Oakland.