Who's Slurping the Benefits of Soda Taxes?
Local governments. But they’re not just doing it for the money.
In 1951, West Virginia imposed an excise tax on bottled soft drinks. The tax was pegged at an unsweet one cent per half liter. The levy was to raise revenue to help finance a school of medicine, dentistry and nursing at West Virginia University. The state is still collecting the money, and the revenue is still earmarked for the medical school, but no other state followed in West Virginia’s footsteps.
A lot has changed since then. Nearly seven decades later, it’s local governments that are acting up. Since 2014, there have been nearly a dozen attempts at passing so-called soda pop laws -- special excise taxes on soda and other sweetened beverages. To date, such taxes have become law in four localities in California, as well as in Boulder, Colo., Philadelphia, Seattle and the Navajo Nation.
Researchers at Tufts University and Harvard University’s Kennedy School of Government looked into the reason for success and failure. Their findings, co-author Dariush Mozaffarian wrote, “suggest that voters respond to [the promise of] improved health, rather than simply raising revenue for more city spending; while in contrast, inside the city council chamber, politicians appreciate having more money to spend.”
So the new versions of the laws represent not just a jurisdictional change, but also a reflection of recent research and a shift in public opinion. There is now a much greater awareness about the effect of sweetened sodas and beverages on public health -- and the costs those health issues visit on state and local budgets. In other words, the tax is seen as a way to tilt people toward healthier behavior and cut back on health-care expenditures.
“If you’re going to make a policy change, you want the best value for the money, and boy, a sugar-sweetened beverage tax is a really good value for the money,” says Steven Gortmaker, a professor in the Department of Social and Behavioral Sciences at the Harvard T.H. Chan School of Public Health. When Philadelphia was considering its soda pop tax, Harvard researchers ran a study that found the tax could help 36,000 people per year avoid obesity, prevent 2,280 annual cases of diabetes, avert 730 deaths over a decade and save almost $200 million in health spending.
Three years ago, voters in Berkeley, Calif., took factors like that into account when they weighed in on Measure D. Measure D proposed a fee of one cent per ounce on sodas and energy drinks and sweetened iced teas. These sugar-laden beverages, proponents of the measure argued, were contributing to the nation’s obesity epidemic. The measure also called for the creation of a panel of experts in child nutrition, health care and education that would make recommendations to the city council about how to use the soda pop revenue to improve children’s health. Measure D passed by more than three-quarters of the votes cast, according to the Alameda County Registrar of Voters.
While a few states have considered the tax in the past year, passage at the state level has been slow going. Illinois legislators looked for fixes for its imploding state budget and discussed a penny-per-ounce tax on sugar-sweetened beverages. Researchers estimated that the tax could raise $561 million a year, while also saving millions in health-care costs associated with obesity and diabetes.
Illinois lawmakers have passed on the tax so far, but the state’s largest and most populous county implemented one on its own -- briefly. Cook County’s tax went into effect in August and was projected to raise $67.8 million this year and more than $200 million next fiscal year. But two months later, the board voted 15-2 to repeal it, thanks in part of a multimillion-dollar “Can the Tax” campaign waged by the American Beverage Association.
Not to be left behind by the changing times, West Virginia is revisiting its sweetened beverage law in the hopes of raising more revenue. If legislators do enact a higher tax, the money would still be earmarked for the medical school.