Will 2016 Be the Year of the Soda Tax?
When Mayor Michael Bloomberg announced his plans to ban oversize sodas in New York City in 2012, the idea quickly became a laughing matter. The policy was dubbed the Big Gulp Ban, and Bloomberg was declared a nanny. It was broadly considered both an overreach and, well, funny.
A New York Times poll that year found that 60 percent of New Yorkers thought the plan was a bad idea, and the courts agreed (although on very different grounds). After years of appeals, the ban was struck down by the state Court of Appeals in 2014.
But in the last four years, the conversation around soda, diet-related disease, and public policy has shifted. While a majority of Americans still say they oppose soda taxes, the policies are gaining momentum both domestically and internationally, with Mexico enacting a tariff on sugar-sweetened beverages in 2014 and Berkeley, California, doing the same after voters approved a ballot initiative the same year. Instead of joking about the nanny state, voters in Boulder, Colorado, will weigh in on municipal taxes; the Oakland City Council is considering a ballot measure; and Philadelphia lawmakers are considering adopting a soda tax as part of the city budget. Other cities are expected to announce ballot initiatives in the summer months as well.
“Everyone seems to have figured out that soda taxes bring in revenue for sure and might also improve health, the proverbial win-win,” Marion Nestle, professor of food studies and nutrition at New York University and author of the book Soda Politics, wrote in an email.
The soda industry, unsurprisingly, sees things differently and expects Berkeley to be the exception rather than the rule when it comes to municipal proposals. Over the last eight years, city- and state-level tax proposals were voted down 43 times, William M. Dermody Jr., vice president of policy at the American Beverage Association, an industry trade group, wrote in an email. “So this year is no different, and public opposition has not changed,” he wrote. According to a recent Harris poll, 62 percent of Americans oppose soda taxes.
“As we know, taxes on common grocery items don’t make people healthier,” Dermody wrote. “Soda taxes only hike up grocery bills that hit the poor and middle income households hardest; they cost jobs and reduce incomes for small businesspeople like grocery store owners and corner store owners who rely on beverage sales for their livelihoods.”
In terms of obesity, the public health outlook has not changed since Bloomberg proposed the Big Gulp ban. Obesity rates, according to a new study from researchers at Duke University, have not budged. “There is no evidence of a decline in obesity prevalence in any age group,” the authors wrote, “despite substantial clinical and policy efforts targeting the issue.” Type 2 diabetes, meanwhile, has been on the rise over the past three decades, with the disease—which used to be so associated with older people that it was called “adult-onset diabetes”—increasingly showing up in children. High sugar consumption isn’t a direct cause, but drinking soda and other sugar-sweetened beverages has been linked to type 2 diabetes, with one study published in the British Medical Journal suggesting that regularly drinking just one soda a day increases your risk of developing the disease by 18 percent over a decade.
Laura Schmidt, professor of health policy at the University of California, San Francisco, called the rise of type 2 among children “the global warming of public health.”
Things do not look much better for adults. There are 30 million Americans living with diabetes, according to the Centers for Disease Control and Prevention, and 95 percent of those cases are type 2. If the problem is left unabated, 40 percent of Americans will develop diabetes by 2050. One of every two Hispanic men and women is expected to develop the disease in his or her lifetime, and the same goes for black women. Even as the rate of diagnosis goes up, treatment is improving, creating a greater economic burden. Health care spending on obesity has been estimated to be as high at $190 billion annually, and diabetes costs $176 billion annually. According to a 2014 study from the CDC, the health care costs related to tobacco now amount to $170 billion a year. In terms of cost alone, diet-related disease is now the bigger threat to public health.
If Bloomberg was focused on obesity in 2012—he made no mention of diabetes in the New York Times story announcing the proposed ban—politicians, researchers, and organizers working on the soda issue today are most concerned with diabetes. The disease—and its disproportionate effects on minority communities—has become a snappy rejoinder to the argument, made by both Sen. Bernie Sanders and the soda industry, that the taxes are regressive.
“Is it regressive?” said Laurie Capitelli, a Berkeley city councilmember who supported a municipal soda tax before the 2014 Measure D campaign. “My flippant response to that is that it’s not as regressive as diabetes,” he said. “Diabetes is disproportionately knocking the hell out of our communities of color.” Schmidt and Nestle both echoed Capitelli, pointing out that diabetes is regressive too.
Even if the Vermont senator has gifted tax proponents a good line, the intraparty battle between Clinton and Sanders—she supports the Philadelphia tax proposal, and he thinks it will hurt the poor—suggests that the debate over how to address the public health problem is not completely settled. But now that Berkeley has followed the Navajo Nation, which passed a soda tax in 2014, an idea that has long been little more than a glimmer domestically has become a political reality, thereby shifting the questions asked of and about the policy. Even as Clinton and Sanders argue about whether or not to tax, lawmakers and researchers are grappling with how the taxes work in practice—how much they can reduce consumption, how much revenue they can pull in, and what can and should be done with that revenue.
In 2014, the first year that Mexico’s soda tax was implemented, consumption declined by 12 percent, with a 17 percent drop among low-income residents. Mexicans drink 176 liters of sugar-sweetened beverages per capita annually, compared with the 95 liters that Americans drink annually, according to a 2014 report from Mexico’s Center for Public Finance Studies. That amounts to Mexicans drinking one and one-third 12-ounce sodas every day. (Euromonitor put Mexico’s annual consumption at 137 liters per capita in 2014, the fourth highest in the world.) According to an SEC filing by Coca-Cola, its sales in Mexico (measured by volume) dropped just 1 percent during the same time period, “primarily due to the impact of a new excise tax.”
Even after the 12 percent drop, Mexicans are still drinking about 12 ounces of soda a day. If that one soda is a can of Coke, it contains 39 grams of sugar, which is 56 percent more than the 25-gram limit the World Health Organization suggests for healthy adults. The decline in consumption increased over the course of the year, and sales may continue to slip. However, as Nestle said, “taxes alone won’t solve the problem, but they are a consciousness-raising starting point.”
Between May 2015, when the Berkeley tax went into effect, and the beginning of 2016, the city raised $1.2 million from its penny-per-ounce tax. (The tax is levied against distributors, not consumers, as many believe—but the distributors are passing on the extra cost.) While the ballot measure that led to the tax did not require revenue to be earmarked for public health spending, in January the Berkeley City Council allocated $1.5 million to programs aimed at reducing soda consumption.
“Obviously it’s a little bit like the cigarette tax—the more you tax cigarettes, the less people smoke,” said Capitelli, who worked on a negotiated revenue package with the panel of experts appointed by the council to recommend how the revenue is spent. (The panel asked for $2 million.) “Ultimately the goal is, I guess, that no people smoke.”
To that end, Capitelli said, “I would be absolutely thrilled if we collected no tax at all, because then we would not be bringing any soda into Berkeley.” But he estimates that in a year when the tax is fully implemented (the city wasn’t collecting the full amount from distributors until last summer, he said, after a deliberate phase-in period), revenue is expected to be more than $1.5 million. A study on how consumption in Berkeley changed in the first year of the tax is forthcoming, but Capitelli said it’s dropping ahead of the national curve, which is at a 30-year low.
Of the $1.5 million earmarked for nutrition programs, just over $600,000 of that will fund cooking, gardening, and nutritional education programs at Berkeley Unified public schools, and the rest will be used to fund grants paid out to local organizations working on reducing soda consumption and other public health programs. Capitelli singled out one grant that will help an organization called Healthy Black Families that works with people in west and south Berkeley—neighborhoods that have larger African American populations than the rest of the city—to “expand considerably.”
“It’s almost a parent mentoring program, working with families around nutrition and health education and parenting skills,” he said. The program starts prenatally and runs until kids enter kindergarten. Healthy Black Families works with about 15 families, and the soda-tax money could expand that to 35 or 40, according to Capitelli.
The educational work is where he thinks the most change can occur, and he points to the campaign as an example of that. A significant amount of public outreach was done ahead of the vote, and Capitelli said that across communities, “the reception was pretty much the same. It was ‘Oh, my God, we’re poisoning ourselves.’ ” The measure passed with 76 percent of the vote, and Capitelli said he thinks the decline in consumption started with the campaign, not the tax.
In Oakland—which despite its rapidly rising real estate prices is a far more racially and economically diverse city than Berkeley or San Francisco—the stakes are higher. Roughly half the city is either black or Hispanic, and its demographics point toward high soda consumption today and a future with increasingly high levels of diabetes. Nearly one out of every 100 people in Oakland has the disease, according to the Office of Statewide Health Planning and Development.
A 2013 video from Oakland-based food- and environmental-justice organizer Ashel Eldridge, who raps under the name Ashel Seasunz, dramatizes a bleak vision of what things are like today. “Food Fight” depicts the challenges faced by a young black kid who lives in a city where drugs and violence aren't what threaten his life but rather, “the local corner store is killing his neighborhood—literally.” In the video, Eldridge raps, “Who would of known that you could die from a diet?”
Eldridge said he would like to see a soda tax in his city, but he considers education the more important avenue to changing habits and public health. “We work more in that space—on the ground, there’s boots, it’s direct,” he said of the efforts in the public health space he’s involved with, including a new initiative to make healthy living the 10th element of hip-hop.
Eldridge, whose grandmother died of diabetes after losing a leg, said that he sees people talking about the disease. “I am hearing stories directly about diabetes as much as obesity” during a multi-city tour he helped organize around the 10th element initiative, he said. “Especially with the amputation levels, or blindness, or infertility—these are definitely affecting people’s lives.” Both his brother and his mother have the disease, and both treat it with insulin injections.
Hip-hop fans, Eldridge noted, are also mourning the death of Malik Taylor, better known as Phife Dawg of the group A Tribe Called Quest, who died in March after decades of living with type 2 diabetes. He was 45. Sugar, he said, exacerbated his disease—but he couldn’t stay off it. “Like straight-up drugs. I’m just addicted to sugar,” Taylor said in the 2011 documentary Beats, Rhymes and Life, nearly 20 years after he rapped the line, “When’s the last time you heard a funky diabetic?”
Looking forward to the fall, Eldridge echoed Capitelli, saying, “I think the campaign itself is an education point—it’s empowering people to make some choices about their health.” Even with soda industry money likely to flood Oakland in an attempt to convince people to vote against the tax—the industry spent $9.1 million to defeat San Francisco’s ballot initiative in 2014—Eldridge sees an opportunity. The argument he would make to voters, he said, would start with that staunch opposition. “These folks are putting this much money into this campaign,” he said, imagining conversations he might have around the soda tax, “and what are you going to do to take control of your own health? How are you going to take responsibility for your own survival?”
Eldridge’s hope for an Oakland tax, were it to pass, is that the revenue would be funneled into community organizations, as some of it is in neighboring Berkeley—but he wouldn’t limit it to nutritional education efforts. Education around food issues is necessary, he said, but people also need help “to deal with the trauma that these communities are facing day to day just for being poor, for just being African American.”
“When you’re looking at poor communities and lower-income communities, there’s a larger public health issue that’s a grander social issue—there’s the trauma of being disenfranchised,” he said.
When unhealthy food and beverages, like drugs, are cheap, easy to get, and habit forming, people are going to turn to them until the underlying issues are addressed. “A lot of that stuff is an attempt to fill in a space that is missing there of actual nutrients, of actual love and a sense of value,” Eldridge said. “On a deeper level, we educate about who people really are. When you love yourself, you put better stuff in your body.”
Cigarettes regularly come up in conversations about soda taxes, and while there are parallels between the successful effort to reduce smoking rates and the fight against soda, it’s not a perfect comparison.
According to a 2015 report from the Centers for Disease Control and Prevention, just over 15 percent of Americans smoke on a regular basis—that’s down from the peak in 1965, when one in two Americans smoked. But while far fewer people are smoking today, cigarettes still present a huge public health threat: The CDC also reports that smoking still causes 480,000 deaths annually, and 41,000 additional deaths are linked to secondhand smoke.
Diabetes, on the other hand, causes about 75,000 deaths annually, and there are no fatal secondhand effects of soda consumption. Sugar may be habit forming, and soda may, as Nestle said, “contain sugars and water and nothing else of redeeming nutritional value,” but it is not nicotine.
Still, considering the industry’s efforts to promote science that supports exercise over diet as a means of combating obesity, as The New York Times caught Coca-Cola doing last year, the comparison is apt in other ways. But if the tobacco campaign is the road map for soda, then the pennies on the ounce that cities are charging distributors will have to rise significantly before they hit the $3 or $4 tax that’s charged per pack of cigarettes in some parts of the country.
A penny per ounce may lead to some change in consumption and generate a decent amount of revenue for public health campaigns, but Schmidt said, “You really have to start looking at the question of when do [soda companies] start paying for part of the public health toll” in a more direct, sustained way.
“There are other, better potential ways to even raise these funds for what I would call abatement of the diabetes crisis that would go further up the line,” Schmidt said. “So levying taxes on producers” instead of distributors, or introducing a cap-and-trade system for the sugar industry, as was proposed in a paper published last year. “Certainly in the tobacco experience, state attorneys general just started suing the companies for the damages to Medicaid budgets.”
“Had we known how receptive the public would be to the campaign, we might have gone for two cents instead of a penny,” Capitelli said. In Philadelphia, the proposed tax is three cents per ounce, and according to a Harvard study published Thursday, it could prevent 2,280 new cases of diabetes annually over the next 10 years and save $200 million in health care costs—$84.05, the researchers estimated, for each dollar it would cost to implement.
“Will it seem appropriate to raise the tax at some point in the future? It might be,” Capitelli said, adding that the education component of the Berkeley tax “is probably greater than the initial taxes that we passed in the 1960s and the 1970s on tobacco.”
“Is it enough right now? I don’t know,” he said. “But it certainly had an impact.”