Search results: soft drink tax

Here’s the proposed statute. The relevant section reads:

“Create Sales Tax on Soft Drinks. Imposes an additional 18 percent rate of sales and compensating use taxes on fruit drinks that contain less than seventy percent of natural fruit juice and non-dietetic soft drinks, sodas and beverages. By increasing the price, it will discourage individuals, especially children and teenagers, from excessive consumption of these beverages. Revenues will be directed for health care initiatives.”

And here’s the American Beverage Association’s predictable response:  hurts the middle class, nobody wants it, no science or logic behind it.  The New York Times refers to what’s happening as a “spirited debate” (I am a participant).

It will be interesting to see how this plays out.  For example, the maker of a carbonated juice drink wrote me to complain that her product, which is 50% juice and taxable, contains under 70 calories per 8-ounces in comparison to non-taxed 100% fruit juice at 110 calories/8 ounces.  Obesity is about calories, no?  Or is it really about the kinds of products people habitually drink?

Governor Paterson says he can raise $404 million in state revenues with a 15% tax on soft drinks (but not diet sodas, juices, milk, or water).   I’m curious to know what you think of this idea.  Please weigh in.

Berkeley, California, ever at the cutting edge of public health nutrition policy, is banning junk food from checkout counters and aisles.

The new policy will require retailers larger than 2,500 square feet to stock healthy food at the register and in areas where customers wait in line, instead of items like chips, soda and candy. It forbids food items with 5 grams of added sugars and 200 milligrams of sodium, chewing gum and mints with added sugars, and beverages with added sugars or artificial sweeteners. In Berkeley, the policy will affect stores like Safeway, Monterey Market, Whole Foods and Berkeley Bowl.

As a result of efforts like these—public health campaigns, soda taxes, and other initiatives—heavy consumption of sugary drinks (more than 500 calories/day) is declining.

According to a recent study, the percentage of children who drink more than 500 calories worth of soft drinks a day declined from 11% to 3%  from 2003 to 2016, and the percentage of adult heavy consumers declined from 13% to 9%.

This trend is in the right direction.

I was alerted to this story by the FoodNavigator-USA headline: Sugar content in soft drinks cut by nearly a third as voluntary efforts fall way off target.

Public Health England’s latest progress report on the food and drink industry’s sugar cutting efforts reveal significant changes in areas where the sugar tax applies, but a disappointing lack of progress with the voluntary sugar reduction programme.

The Year 2 progress report finds:

• The sugar in taxed drinks affected by the Soft Drinks Industry Levy (SDIL) decreased by 28.8% between 2015 and 2018.
• For non-taxed products, the reduction in sugar was only 2.9%.
• Total sugar increased by 2.6%: the largest increases were for ice cream, candies, sweet spreads, and cookies.

Moral: if you want companies to reduce sugar in their products, tax them.

In 2017, Jennifer Pomeranz and Mark Pertschuck published an article in the American Journal of Public Health titled State Preemption: A Significant and Quiet Threat to Public Health in the United States.

How right they were.

Last week, California Governor Jerry Brown signed a law banning new soda tax initiatives in the state until 2030, thereby preempting local initiatives planned and in progress.

How did this happen?

Raw, overt power politics (my emphasis throughout).  The Sacramento Bee shows how it’s done.

The Hill explains that this bill was a compromise.

The measure was a last-minute compromise to stop an initiative circulated by the beverage industry that would make it more difficult to raise state and local taxes in California.  “Mayors from countless cities have called to voice their alarm and to strongly support the compromise which this bill represents,” Brown wrote in a signing message.

Big Soda’s tactic: use California’s ballot initiative process to put forth a measure requiring a two-thirds majority to pass any new tax legislation.  Brown and those mayors must have assumed it would pass (anything to prevent new taxes).  Brown said he would agree to a 12-year moratorium on new soda taxes if the soda industry would withdraw the measure.  It did, and he signed.

In explaining the so-called “compromise” (in quotes because this was blackmail), US News quotes state senator Scott Wiener (Dem-San Francisco):

This industry is aiming a nuclear weapon at government in California and saying, ‘If you don’t do what we want we are going to pull the trigger and you are not going to be able to fund basic government services.”

In other words, the beverage industry held the state hostage. Like the Sacramento Bee, I’d call this a shakedown.

The Sacramento Bee also called it extortion—a power play by the American Beverage Association that:

appears to be working as intended. As the deadline for signing the state budget approaches this week, a developing trailer bill attached to it would give Big Soda a 12-year ban on local soda taxes in exchange for dropping a ballot initiative that would threaten the finances of cities throughout California. Who says extortion doesn’t pay?

The New York Times explains the “stunning” preemption:

Now the beverage industry has a new approach. Instead of fighting the ordinances city by city, it is turning to states, trying to pass laws preventing any local governments from taxing their products.

The reactions have been fierce.

Nancy Brown, CEO of the American Heart Association says, “We’ve seen some cynical moves to protect profits, but this soda tax ban is a new low.”   The American Heart Association issued a statement:

The bill—a last-minute, backroom deal negotiated and written in secret by beverage industry lobbyists and their allies—is a significant step backwards in the ongoing effort to reduce overconsumption of sugary drinks.

“This is one of the worst pieces of legislation I have seen in more than 30 years spent fighting for better health for kids and families,” said Nancy Brown, CEO of the American Heart Association. “We could not be more disappointed to see this bill, taken straight from the tobacco industry playbook, pass.”

The LA Times said “Shame on California lawmakers for caving in to the soda industry.”

Salon explains:

There’s a lot at stake for America’s biggest soda companies. Carbonated soft drinks – such as Coke, Fanta, Sprite, and Fresca – make up two-thirds of Coca-Cola’s production, and U.S. soda sales earned the company more than $10 billion in 2015. And PepsiCo’s soda sales – including Pepsi, 7Up, and Mountain Dew – still account for one-quarter of the company’s $38 billion in North American sales, despite a shift toward healthier products. But soda consumption fell to its lowest point in 31 years in the U.S. in 2016, according to Fortune, and Coca-Cola concedes that sweetened beverage taxes “are hurting Coke’s business.”

I’ll end with this quote from the New York Times:

Bill Monning, the Senate majority leader, was one of a handful of Democrats who voted against the bill. He called its passage “unprecedented” and said it would stop cities and counties “from being able to take steps to protect the health of their residents”…“It’s a sad day for democracy in California,” he said. “But ever the optimist I think that the outrage of Big Soda blackmailing the state legislature and the people of California is going to boomerang.”

Let’s make sure that happens.

And while we are at it, don’t let this happen in your state.  If the soda industry threatens to mess with state elections, tell your representatives and governor to resist.  California public health advocates: keep the pressure on.  Advocate for bans on sodas everywhere you can: schools, hospitals, workplaces, government offices.  Expose what the industry is doing to protect its profits at the expense of public health.  Don’t give up.  Courage!

For the record, here’s where to find out more about this shameful episode.

• On Twitter, see #NoSodaShakedown
• The Assembly hearing (video)
• Joint statement from the American Heart Association and 20 other organizations opposing the soda industry’s actions
• Statement from the Public Health Institute
• Nancy Brown’s dinner invitation to Jerry Brown
• San Jose Mercury News: Big Soda’s Big Play 
• The American Beverage Association’s $450,000 contribution to an election committee
• Shaniece Alexander and Anna Lappé’s Big Food is the new Big Tobacco
• Larry Cohen in The Hill: alarm bells
• Latest development: California medical societies want soda tax on the ballot

The Urban Institute has just published The Pros and Cons of Taxing Sweetened Beverages Based on Sugar Content.

The report is funded by the American Heart Association and others.  The AHA issued a press release.

The sections of the report state its conclusions:

• Taxing Sugar Content Is the Least Costly Way to Reduce Sugar Consumption
• Taxing Based on Sugar Content Is Feasible at the National Level
• Taxing Based on Sugar Content Raises More Issues at the State and Local Level but Is Generally Feasible As Well

The report concludes:

We conclude that taxing based on the amount of added sugar a drink contains, either by taxing sugar content directly or by levying higher volume taxes on drinks with more sugar, is feasible in many jurisdictions and reduces sugar consumption more effectively than comparable taxes on drink volume.

Broad-based volume or sales taxes on all soft drinks, however, raise revenue more efficiently.

Federal, state, and local policymakers thus face trade-offs between using sweetened-beverage taxes to raise revenue and to discourage consumption of added sugars.

Keep this in mind when trying to do this in your community.

Wonder of wonders, the UK’s Chancellor of the Exchequer, George Osborne, has put a soda tax into his new budget initiative (see BBC account, the video and text of Osborne’s speech, and the Treasury department’s fact sheet on the soda tax).

Here’s how the tax is supposed to work:

Osborne says the tax will bring in £520 million ($732 million) in the first year, and he intends to use it to fund more sports in schools.

But it goes into effect in April 2018.  This is to give the industry time to reformulate products with less sugar.  But—the delay also gives the industry ample time to block the tax.

Public Health England supports the tax (see statement).

But the soda industry wasted no time reacting to this bad news.

• Coke, Pepsi, and other soft drink companies strongly objected.
• The immediate result: a fall in their stock prices.
• The immediate reaction: Sue the government.  On what grounds?  Discrimination.  The tax does not affect sugary juices, milkshakes, or processed foods.

The makers of artificial and alternative sweeteners think this will be a win for them.

Will the tax help reduce obesity?  On its own, that would be asking a lot.

Jamie Oliver, the British chef who favors the tax, says of course it won’t work on its own.  It needs to be accompanied by six additional actions (food labels, better school food, curbs on marketing to kids, etc.).

Why are soda companies so worried about this?  It could be catching.

• Mexico already taxes sodas, and the Philippines, India, and South Africa are considering them.
• Berkeley has already passed a soda tax.
• The proposed tax in Philadelphia looks like it has widespread support.

Will the UK tax stick?  Watch Big Soda pull out every stop on this one.

And think about what they are doing to fight soda taxes when you read or hear that soda companies want to be part of the solution to obesity.

My monthly first Sunday Food Matters column in the San Francisco Chronicle:

Q: I hear that the Mexican government wants to increase taxes on sodas as a way to fight diabetes. The soda industry persuaded voters to defeat soda taxes in Richmond and El Monte last year. Won’t it do the same in Mexico?

A: It might. I’m just back from a lecture trip to Mexico City where I heard plenty about the proposed soda tax and the industry’s response to it.

Last month, the Mexican government proposed an additional soda tax of one peso (about 8 cents) per liter. The idea is to raise $1.5 million per year while discouraging soda consumption, thereby helping to reduce the country’s high prevalence of obesity and Type 2 diabetes.

Mexicans drink lots of soda. By some estimates, average per capita consumption is 50 gallons a year, the highest in the world. It’s no coincidence that more than 70 percent of Mexicans are overweight or obese, and around 15 percent have Type 2 diabetes, a prevalence that terrifies health officials. This type of diabetes, if undiagnosed and untreated, can lead to blindness or foot amputations.

‘Nutrition transition’

Mexico is a classic example of a country in “nutrition transition.” As the economy improves, people increasingly buy high-calorie ready-made foods, put on weight, and raise their risk for diabetes. Meanwhile, the poorer segments of the population continue to experience high levels of stunting, iron-deficiency anemia and vitamin A deficiency.

This makes obesity a relatively new problem in Mexico, one widely understood to result from the introduction of processed foods – especially sodas – into the Mexican food market.

I could easily see how deeply sodas are embedded in Mexico’s food culture. Sodas were advertised and available everywhere. And they come in enormous three-liter bottles that cost less than the price of bottled water – only 17 pesos ($1.35) each. Clean water is not always available, making sodas the easy choice.

Sodas are cheap because Mexico grows its own sugarcane and sells it at market prices. We, however, artificially support the higher price of U.S. sugar through tariffs and quotas. That’s why our sodas are made with high fructose corn syrup. We subsidize corn production so corn syprup costs less than sugar.

Some people think cane sugar tastes better than high fructose corn syrup, although controlled taste tests don’t always back this up. It’s ironic that U.S. supermarkets now carry, at highly inflated prices, Mexican Coca-Cola sweetened with cane sugar.

Industry efforts to defeat the Mexican soda tax have been ferocious, just as they were in Richmond and El Monte last year. Producers argue that if the tax really does decrease consumption, it will cause hundreds of thousands of jobs to be lost.

I saw a newspaper advertisement from the Mexican Beverage Association that not only attacked the science relating soft drinks to obesity, but extolled the health benefits of sodas: “Sugar is nutritious; it’s a carbohydrate. Carbohydrates are essential for life. Sugar is indispensable for the brain. Soft drinks hydrate and bring energy.”

An ad from the sugarcane industry also threatened job losses – “The tax will generate unemployment and discourage productivity and investment” – and noted that workers and the poor will bear most of its burden.

The big questions

As with any such initiative, the big questions are whether the tax is likely to reduce soda consumption, obesity and diabetes, and whether the revenue will be used for widely beneficial public health purposes. Mexico’s Congress will have to address these questions when it votes on the tax in the weeks ahead.

In the meantime, a coalition of consumer and health groups, in part funded by Bloomberg Philanthropies, has been putting posters in subway stations that illustrate the amounts of sugar in soft drinks. The groups are actively advocating for the soda tax and for using its funds to provide free potable water in schools – something that does not now exist. But TV stations have refused to carry their ads for fear of losing soda advertisers.

Like their U.S. colleagues, Mexican public health authorities are searching for effective ways to reverse obesity trends. Sugary drinks are an easy target. Taxing them might happen despite industry opposition – especially if the funds are earmarked for clean water.

Editor’s notes: Marion Nestle will discuss her new book, “Eat, Drink, Vote: An Illustrated Guide to Food Politics,” with Narsai David at the Commonwealth Club on Oct. 15 at 6 p.m., and at Book Passage in Corte Madera on Oct. 19 at 11 a.m.

She is also receiving the James Beard Foundation Leadership Award for her writing about how science and public policy influence what we eat. The award ceremonies are Oct. 21 at the Hearst Tower in New York.

Marion Nestle is the author of “Eat, Drink, Vote,” “Why Calories Count: From Science to Politics,” “Food Politics” and “What to Eat,” among other books. She is a professor in the nutrition, food studies and public health department at New York University, and blogs at www.foodpolitics.com. E-mail: food@sfchronicle.com