As Cities Contemplate Soda Tax, Critics Say It Kills Jobs and Has No Impact on Health

One study finds that implementing soda tax leads to more beer consumption

October 17, 2016

As cities in California and Colorado contemplate whether to implement a tax on soda, critics say the tax would kill jobs and would have no significant impact on health, according to a report from Pew Charitable Trusts.

Next month, San Francisco, Oakland, and Albany, California and Boulder, Colorado will vote on whether to place a tax on sugary drinks, such as a penny-per-ounce levy on soft drinks, sports drinks, iced tea, juice, energy drinks, and syrups and powders that can be made into beverages.

"Health advocates argue that raising the price on beverages sweetened with sugar will reduce consumption and ease the nation’s exploding rates of obesity and diabetes," the report states. "The soda industry maintains there’s no proof of that."

The soda industry, which pays $13.6 billion in state taxes each year, spent $40 million fighting soda taxes between 2011 and 2014 and spent $10 million to fight the tax in San Francisco in 2016.

According to a report from the Autonomous University of Nuevo Leon, Mexico’s one peso-per-liter tax on soda had a greater impact on poor households and only reduced consumption by three percent.

"The [Autonomous University of Nuevo Leon] study estimates that approximately 10,000 jobs have been lost as a result of the tax’s introduction," said Geoff Parker, CEO of the Australian Beverages Council. "Not only did it cost jobs, promote cross-border shopping, and provide an administrative nightmare to enforce, it had no discernable impact on public health."

Another study from Ohio State and Cornell universities found that a soda tax led to more beer being bought by households and concluded that caloric intake was not reduced.

A Berkeley study found that a soda tax led to a 21 percent drop in soda consumption in the city’s low-income neighborhoods but found there was a four percent increase in consumption in San Francisco and Oakland.

"Our products are not drivers of obesity," said William Dermody, vice president of policy for the American Beverage Association. "We are against being discriminated against to fill budget holes for governments that have failed to balance their budgets."

Philadelphia has imposed a tax that would add 1.5 cents per ounce to the cost of sugary drinks as well as to those that have been sweetened with substances other than sugar.

"Anthony Campisi, spokesman for the Philadelphians Against the Grocery Tax Coalition that is funded by the beverage industry, said the tax will hit working families and small business the hardest," the report states.

"Middle-class shoppers can find another nearby area that doesn’t impose that tax to do their shopping, he said, while ‘people who live in the poorer sections of the city who don’t have a car’ don’t have the same choices."

Published under: Jobs , Taxes