SF Progressives Push For Regressive Tax On Soda — Will It Work?

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July 24, 2014 by The Zemanifesto

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This November, San Francisco voters will weigh in on a proposed soda tax, which would effectively add two-cents per ounce to the cost of any “sugar-sweetened beverage” with over 25 calories per 12 ounces.

Here’s what won’t be taxed under the law if it passes, according to the San Francisco Office of Analysis :

  • “Diet” beverages made with artificial sweetener
  • Milk and “milk alternatives”
  • 100% fruit and/or vegetable juice drinks
  • Baby formula or medical food
  • Protein shakes or “meal replacement” drinks
  • Drinks “designed for use for weight reduction”
  • Alcoholic beverages
  • Powdered drink mix for consumers like Koolaid™ (oh yeah)

 

The reason for the tax most often cited by supporters is improving public health by reducing sugar consumption, and in turn obesity, particularly among children.

The Office of Analysis’ report gives a mixed forecast of how effective the tax will be in achieving that goal. While it does assert that the tax will reduce consumption by just over 30%, it is more reserved on the positive impact on public health via obesity.

From the report:

In order for this tax to have an impact on obesity, increased taxation
would need to result in a reduction in overall caloric intake, and not a substitution to calories from other sources. Some research suggests that some or all of the reduction in caloric intake due to SSB taxes would be offset by increases in consumption of other high calorie food and drinks.

Pouring-on-the-Pounds_bo6RqThat exact consumer behavior — substituting less expensive high-sugar food items — was observed in at least one study, by the American Journal of Agricultural Economics. 

Chen Zhen, the lead research economist on the study, said consumer purchasing patterns for food differ from those for tobacco:

“Instituting a sugary-beverage tax may be an appealing public-policy option to curb obesity, but it’s not as easy to use taxes to curb obesity as it is with smoking… Consumers can simply substitute an untaxed high-calorie food for a taxed one.”

This factor is acknowledged, at least tacitly, by the proposed law’s earmarking of the resulting revenue for programs aimed at improving consumer decisions through health and nutrition education.

Sugar_in_soft_and_juice_drinks

This is how the report says the money will get distributed:

  • 40% to San Francisco Unified School District
    • “Student nutrition services, school-based gardens, nutrition classes, and cooking classes, teacher training and curricular support in nutrition education programs, and after school programs, and expansion and improvement of physical education.”
  • 25% to Department of Public Health and the Public Utilities Commission
    • “Healthy food access initiatives, drinking fountain and water bottle filling stations, oral health services, chronic disease prevention, and public education campaigns.”
  • 25% to Recreation and Park Department
    • “Recreation centers, organized sports, and athletic programming.”

An additional 10% is earmarked for grants to nonprofits dedicated to promoting public health, as well as 2% for administrative fees (because bureaucrat math is totally fucked).

youth-athletics

These proposed services are intended to increase the potential for obesity reduction, but they also serve as a counterweigh to the uncomfortable truth about the tax — it’s completely regressive.

The consumption of beverages targeted by the law is much higher among poorer and less-educated people, a fact acknowledged (albeit with a major caveat) by the city analysis:

Those below the poverty line also get a much larger share of their daily calories from sugar-sweetened beverages at 9.0%… like any flat tax targeting items that are disproportionately consumed by lower-income people, the tax could be seen as regressive. However, both the programs and services supported by the tax revenue, and the long-term health and economic benefits, will also be primarily realized by low-income groups.

And there’s another problem — the exclusion of diet beverages. There are still uncertainties about the safety of artificial sweeteners like saccharine, aspartame and sucralose, but more germane to the matter at hand, they do not positively impact weight loss.

In fact, some experts contend that the negative impacts of drinking diet soda on weight and health are the same as those from regular soda. This coupled with the distinct likelihood that consumers will start substituting diet soda for regular because of the savings — roughly a quarter per 12 oz. can — calls into serious question the expected benefits of the tax.

diet-coke-addiction

The earmarking of funds for a specific purpose, rather than just putting them in the general fund, means at least 2/3 of voters will have to approve the tax for it to go into effect.

And as the Bay Guardian reports, proponents of the law face big-money opposition by the soft drink lobby and a track record of failure in other cities attempting to institute similar laws.

So does the soda tax have the (100%, no sugar-added) juice to overcome those challenges? All shall be revealed in November.

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2 thoughts on “SF Progressives Push For Regressive Tax On Soda — Will It Work?

  1. Dana Woldow says:

    Arguing against a beverage tax because it is “regressive”, and would hit low income people harder, takes a very narrow view of the problem. Know what else hits low income people harder? Life.

    Virtually every expense – from housing and food to transportation and health care – hits low income people harder than wealthier folks, and takes a larger percentage of a poor person’s income than a middle class or rich person’s income.

    Know what else hits low income people harder? Poor health.

    Living in poverty can double or even triple the likelihood of developing diabetes, according to leading health researcher and Professor Dennis Raphael, who says “not only are low-income and poor people more likely to get [diabetes], but they’re also the ones that, once they get it, are much more likely to suffer complications. And the complications from Type 2 diabetes when they’re bad are really bad, whether it’s amputations, or blindness, or cardiovascular disease.”

    The World Heart Federation says, “Being poor, no matter where in the globe, increases your risk of heart disease and stroke.” A 2011 study done at UC Davis found that “people with lower socioeconomic status had a 50% increased risk of developing heart disease compared to other study participants.”

    If beverage companies, virtually all of which also sell bottled water and sugar-free diet drinks, really wanted to be supportive of low income people, wouldn’t they be encouraging them not to drink sugary beverages, since studies have linked their consumption to heart disease and to diabetes?

    Know who has the lowest household income in San Francisco? Families of color.

    According to the most recent (2010) U.S. Census American Community Survey, median household income for African Americans is the lowest in San Francisco, at $29,409, followed by mixed race households at $39,779, “other” race households at $46,245, American Indian households at $56,151, and Hispanic households at $56,861. Median household income for Asians was $60,914, while for whites it was $86,837.

    But beverage companies target communities of color with their advertising, especially minority children and youth, despite the fact that the Centers for Disease Control and Prevention (CDC) says, “African Americans, Hispanic/Latino Americans, American Indians, Asian Americans, and Pacific Islander Americans are at particularly high risk for type 2 diabetes.”

    Learn more at http://beyondchron.org/soda-tax-myths-are-beverage-companies-friends-to-the-poor/

    • Thanks for taking the time to c̶o̶m̶m̶e̶n̶t̶ paste a huge block of text from something you published elsewhere, Dana. You raise several points and I’ll try to address them all.

      [By the way, you accidentally put scare quotes around “regressive.” When you levy a flat tax on a product predominantly consumed by poor people, that’s the very definition of a regressive tax.]

      As you correctly point out, poor families (predominantly comprised of people of color in the Bay Area, as in many other parts of the US) get hit harder by every expense in their lives. Even a loaf of bread takes a bigger chunk of a low-income family’s money than it takes from a middle class family.

      This is why I’m happy some of my (progressively taxed) income goes to Medi-Cal, SNAP, WIC, Section 8 housing vouchers and other programs created to address just such socio-economic disparity. I actually wish more of it did, because I do want poor families to get healthcare, I just don’t think they should have to pay for it twice — or at all for that matter.

      If you’re interested in improving the health of poor people in this country, getting them into a doctor’s office for regular checkups and preventative care is going to do a whole lot more than placing a regressive tax on one class of unhealthy food products they consume. In fact, it would probably do even more than earmarking 10% of the resulting tax revenue for grants to groups like PEACH SF.

      And who said beverage companies are being “supportive of low income people?” I thought beverage companies were in the business of selling beverages. I didn’t realize they had professed some higher calling as a social agency.

      I do think it’s interesting you mention the equal stake beverage companies have in diet beverages and bottled water though, because sales of those would almost certainly spike under this tax — particularly in SF, where so many people are “on Diet Coke.” I mistrust multinational corporations as much as anyone, but I find it hard to see why they’d care if a consumer buys the healthy or unhealthy $2 bottle that costs 5¢ to manufacture.

      By the way, you seem to think this tax is on beverage companies — it’s not. It’s a tax on distributors, and please believe, distributors will pass the cost along to the consumer.

      So yeah, making the poorest among us bear the burden of funding their own nutritional reeducation would qualify as one of my “bugaboos,” but more importantly I just don’t think the tax will work.

      Thanks for reading and “commenting.”

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