Soda Taxes Are in the News Again

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I wrote about this back in July of last year, after the Wall Street Journal had a pros vs. cons debate about whether there should be a tax on sugary drinks.

I noted back then I was fully in favor of such a tax, and the research seemed to indicate that such taxes are most effective when the proceeds from such taxes are used to promote healthy behavior.

I am happy to report that the idea seems to be gaining momentum.

A commission of the World Health Organization recommended in January that governments consider special taxes on sugar-sweetened beverages. The WHO recommended last year that adults and children keep added sugars to below 10% of daily calories—little more than a 12-ounce can of regular soda.

This past Wednesday there was a surprise announcement by the U.K. government of a levy on sugary drinks. The U.K. Treasury chief stated that the new tax, which will be introduced in two years, would raise $735.8 million in its first year, with receipts subsequently declining as makers reduce sugar content.

Lawmakers in New York state are proposing health-warning labels, and California legislators are looking at a special tax on sugary drinks. San Francisco residents are collecting signatures to put a sugar tax back on the ballot after narrowly falling short in 2014. And officials in Baltimore are weighing health warnings for sugary drinks in stores.

Philadelphia’s mayor, Jim Kenney, this month proposed a tax of three cents per ounce on sugar-sweetened beverages (36 cents for a 12 ounce soda)—three times as much as the tax in Berkeley, Calif., which in late 2014 became the first U.S. city to pass such a measure. Mayor Kenney is busy promoting what the tax could achieve – universal pre-K, jobs, and development projects to the tune of $400 million over five years.

In all, 39 states and the cities of Chicago and Washington have taxes on sugary drinks, though those taxes generally are too small to affect consumption, according to the Center for Science in the Public Interest.

Mexico’s tax of about 10% on soda, implemented in 2014, has helped to cut consumption of those drinks by 6% from the average of the previous two years, according to a study in BMJ, formerly known as the British Medical Journal.

A 10% tax seems significant enough to make a difference, as does Berkeley’s one cent per ounce tax. So the Philly tax is really quite aggressive. And I am fine with that.

The proposed tax seems to be a win-win; a positive impact on people’s health as a result of less sugar consumption, and providing access to pre-k for all children in Philadelphia.

I wish Mayor Kenney the best; I am sure it will be quite a battle with the soda lobbyists. The beverage industry reportedly spent about $2.3 million in Berkeley and failed to stop the measure, but more money was thrown at San Francisco, where a soda tax was defeated.

Go Mayor Kenney, and Go Nova!

 

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Jim Borden

Accounting Prof. at Villanova; happily married for 30+ years; father of 3 outstanding young men; vegan; interests: fitness, creativity, education, blogging, social media.

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