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

Stephen Sugarman, Roger J. Traynor Professor of Law | October 14, 2014

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.

Comments to “Berkeley’s proposed soda tax would cut sugar intake, and that’s a good thing

  1. Why go to all of the trouble and expense of becoming a student at Berkley, when this professor and others join Bit Government in deciding what is good for us and preventing us from enjoying what they decide is bad for us? Way to go, Berkley….training a bunch of ‘droids.

  2. The people I know who are addicted to smoking, taxes don’t stop them from puffing.

    Those people I know who love to drive fancy cars are not switching to electric cars because of taxes.

    This is just another way for the city to collect money.

    You’ll drive some families to drive a little further to go shopping, but over all it won’t stop people from drinking soda.

  3. Whatever. It’s not like it’s the county or the state. Simply cross the town border and shop there.

  4. Wonder why Berkley needs the help of BIG BROTHER re what folks there drink, with so many smart people populating the place?

  5. I wonder why the Ashby BART Station has been covered on the floor and walls and every available billboard with “NO on D” signage?
    I wonder why folks without jobs are standing outside of the station being paid to hand out flyers and support NO on D?
    I wonder why the flyers they are handing out talk about calories and milk-based drinks?
    I wonder who has money like this to stop a health-conscious, community-minded, long-term cost-saving measure like YES on D?
    The amount of money at stake must be huge for Big Soda to publicly admit they are putting this much money into confusing nutritional education and resisting noting the public service or public good to be achieved in this vote.

  6. Recent research indicates that increases in prices of sugary beverages leads to greater caloric intake from substitute beverages. (See here.)

    Are you sure you are not trading reduced sugar intake for higher caloric intake (read:obesity)?

    “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.”

    Please cite sources and that the majority of sugar intake comes from SSBs and not from other dietary sources so we can determine their veracity.
    Otherwise you’re just hand-waving and speaking from bias not scientific fact.

    There seemed to be consensus on the benefits of margarine over butter a few decades ago too.

    Further you make an economic argument that makes no sense. “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.”

    You claim that low-income people consume more SSBs. A tax will necessarily increase their expenses disproportionately to other more privileged individuals (as sin taxes inevitably do). But then these expenses go into the general fund which benefits all Berkeley residents. How exactly are they better off?

    IOW, if you and I go into a bar and you force me to buy a round, then would you suggest I was better off because I have beer now? Prior to your tyranny I could afford 2 beers. Now I have 1 beer and lost the opportunity cost of the second one (you are drinking it).

    DD is right, it is “much easier for a person to advocate for an aversive measure when it would have only a mild impact on them.”

    It is even easier to advocate for an aversive measure negatively impacting others but that will have a positive impact on the advocate (money for the general fund plus that nice feeling of fanatical righteousness).

    • Oh, and by “please cite sources”, I would hope that a man of your education and rationality would know to cite replicated, published, peer-reviewed medical studies, not a book intended for a popular audience.

  7. Whether or not people consume sugared drinks is not the Government’s business. Will we begin taxing foods that contain too much salt? Too much fat? Maybe those pepperonis on your pizza are a bit too unhealthy for our liking (oh, and they support animal cruelty), so we’ll implement a 1 cent per pepperoni tax on your pizza.

    As D.D. rightly commented, one’s consumption of a soda has no adverse affect on anyone else. It’s a personal decision.

    Do you really think someone coming into a mom & pop grocery store looking to by a Coke is going to respond well to being schooled on how that’s a bad choice and, “oh, here, by the way, we have these alternative drinks that you should be drinking instead”?

    Also, I’m not convinced that a 1 cent per ounce tax is not going to be a deterrent to anyone. So all this really does is publicize a moral stance by the city while adding to the city coffers.

    Education is the route to reducing sugar intake.

  8. D.D. – I recommend you read Fat Chance by Dr. Robert Lustig. It would educate you tremendously and help you realize your comments are incorrect. That is all.

    • I recommend you read Dr Tappy and numerous other metabolic biologists responsible for the actual research on sugars and learn why many in public health and science do not value Lustig’s performances on YouTube and bypassing of peer review process.

  9. I’m from the North Bay and graduated over a decade ago, so the tax wouldn’t affect me, but I’m still against it. People seem to forget that the anti-smoking movement took place because second-hand smoke damages the lungs of everybody around the individual, particularly children & those with lung disorders. That crucial point means smoking isn’t just a personal lifestyle/health choice an adult can make about their own body, much as having unprotected sex doesn’t only risk the health of one party.

    A person drinking soda, however, isn’t causing others around him/her to be involuntarily damaged, making it a private personal decision, and most people already only have an occasional can. It’s only one of many unhealthy behaviors adults often choose to engage in, including eating meat, sedentary amusements like video games & TV, or staying up late on a work/school night; even though our state could use the tax money, modern technology allows for monitoring each person’s activity levels in detail, and exercise is arguably much more important to health than avoiding soda, there’s no attempt to tax or otherwise coerce a reduction in the other unhealthy choices. For that matter, there’s no attempt to tax the many forms of fruit juice that have tons of sugar added.

    Based on the past, one of the primary reasons that soda has become the latest obesity/health bogeyman is that most people already only have it occasionally, and the frequency is tied strongly to socioeconomic status. The greater the person’s socioeconomic status, the easier it is to afford to drink alternate beverages, own a home with pleasant-tasting tap water, experience other pleasures on a routine basis (thus are less likely to use a can of soda as a cheap equivalent), and engage in activism; the opposite is the case for low-income individuals. When you suggest reducing soda drinking to occasional social situations, for example, you’re most likely assuming that you’ll simply drink something else when you’re thirsty; soda probably isn’t one of the few affordable pleasures in your life, and you probably don’t buy it by the box as individual bottles/cans are too expensive, so the tax wouldn’t particularly affect you either way.

    It is much easier for a person to advocate for an aversive measure when it would have only a mild impact on them, as is the case for activists when it comes to a tax on soda; if the other unhealthy behaviors were subject to some form of aversive, however, it would affect the activists as much as anybody else. That’s the real reason that soda is being targeted: it doesn’t harm others, it isn’t far worse than any other unhealthy choice, and it doesn’t even cause environmental damage like some of the other options. If any of those were actually the case, then I’d agree with the tax as a reasonable approach.

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