Berkeley Is Making Money off People Drinking Soda
After a bit of a rocky start that delayed its full implementation by a couple months, the country’s first—and only—municipal soda tax is generating revenue. City officials in Berkeley, California, announced Monday that the landmark tax brought in $116,000 in its first month. Now the city just has to decide what to do with the money.
Berkeley projects its penny-per-ounce tax on soda and other sugar-sweetened beverages is on track to bring in $1.2 million in its first year, which is still less than half of what the soda industry spent trying to defeat the ballot measure in the run-up to last November’s election, according to local news site Berkeleyside. Despite that influx of campaign cash, an overwhelming majority—75 percent—of Berkeley voters approved the initiative.
“We’re well on our way to a smooth implementation,” Berkeley Councilmember Laurie Capitelli said at a press conference yesterday. “We wanted to get it right.”
While taxes are still largely untested as a way to combat soda consumption, extensive research shows that the sugary drinks present a significant public health risk. Drinking one to two cans of soda a day can increase the risk of developing type 2 diabetes by 26 percent, according to a 2010 study published in Diabetes Care. Soda has also been linked with obesity, heat disease, and other diet-related health problems.
Even with the initiative implemented and the money coming in, both sides of the campaign are still battling over the tax.
In March, Berkeleyside reported the grumbling of local beverage distributors, who complained about the city’s lack of guidance on the tax and what they claim are the its confusing loopholes.
This prompted a quick op-ed rebuttal from Capitelli, along with former U.S. Labor Secretary Robert Reich and Dr. Vicki Alexander, Berkeley’s former health officer. The trio noted that the grousing of the distributors seemed to echo the beverage industry’s antitax propaganda, which aimed to create confusion when in truth, the tax is very simple. “It focuses on those high-calorie, low-nutrition sugary drinks that are a leading cause of diabetes and that Big Soda markets directly to our children, especially children of color,” the trio wrote.
Yet the beverage industry continues to catcall from the sidelines. Following the city’s announcement Monday of the first month’s revenue from the tax, the Twitter feed of the industry front group Californians for Food and Beverage Choice lit up.
“Kind of ironic that they need ppl to drink more soda in order to generate the $$ to stop them from drinking soda,” read one snarky Tweet, while another tried to turn the $116,000 figure on its head, needling tax supporters for, in effect, celebrating that Berkeley residents had to guzzle “1,160 oz” of sugar-sweetened beverages “in the first quarter” to generate the revenue.
You have to be suspicious of any group that gets its facts and basic math so wrong. The revenue wasn’t for the first quarter but for a single month. At a penny per ounce, Berkeley had to consume 11.6 million ounces of sugary drinks to generate $116,000.
Which points to the larger, unanswered questions about Berkeley’s soda tax experiment. It’s too soon to tell whether the tax will substantially decrease consumption. Reports from Mexico have been mixed over whether that country’s widely hailed soda tax, adopted in 2014, is responsible for a recent downturn in consumption or whether other factors have come into play.
No doubt an equally important mark of success will be how effectively Berkeley puts its soda tax revenue to work. A newly convened “sugar-sweetened beverage product panel of experts” is scheduled to start meeting this week to come up with recommendations on how to spend the money, both to best combat the public health effects of too much sugary-drink consumption and to counter the industry’s outsize marketing prowess. It’s a tall order. While the beverage industry may continue to deride soda taxes as a “money grab,” in reality, the $1.2 million per year Berkeley’s tax is predicted to bring in is a pittance compared with the estimated $860 million and more that beverage makers spend to advertise their liquid candy every year.