Soda Tax Update: Santa Fe Rejects, Seattle Considers

Credit: AP Photo/Matt Rourke

Over the past six months, five U.S. cities and one county have approved taxes on sugar-sweetened beverages as a means of raising revenue and promoting public health. In this feature, we’ll catch up on the news and activity surrounding the issue from across the country.

Santa Fe Rejects Proposal

After suffering a string of losses over the last year, the soda industry chalked up its first victory this week over soda tax proponents in Santa Fe, N.M.

A record 37.6 percent of voters in the state’s capital city turned out for the special election on Tuesday to reject a proposed two-cents-per-ounce tax on distributors of sugar-sweetened beverages, the culmination of a pitched battle in which outside groups and political committees, including former New York City mayor and staunch anti-soda campaigner Michael Bloomberg, spent more than $3 million.

The results showed 11,533 votes (58 percent) against the measure and 8,382 votes in support. The proposed tax on sugar-sweetened beverages would have equaled Boulder, Colo. as the highest in the nation.

According to the Albuquerque Journal, the decision was split along economic lines: voters in the affluent northern section of the city were about evenly distributed as for and against the measure, while the city’s middle-income and lower-income neighborhoods were solidly against.

Proponents of the tax — which included Santa Fe Mayor Javier Gonzales, the American Heart Association, and local teachers unions — argued that the levy would generate funds for expanding preschool to 1,000 children whose families could not afford to it. Bloomberg contributed $1.1 million to a local political action committee supporting the measure.

On the other site, industry trade group the American Beverage Association spent over $1.3 million to defeat the tax.

Seattle City Council Scrutinizes Tax, Holds Public Hearing

Like other municipalities before it, Seattle plans to use a proposed 1.75 cent-per-ounce tax on sugar-sweetened beverages, levied on distributors, as a source of much-needed funding for social programs in the city.

But in a hearing on Wednesday, some city council members raised concerns that only 14 percent of the $23 million the levy is projected to generate in 2018 will be dedicated to public health initiatives.

As proposed in a plan supported by Mayor Ed Murray, the tax will fund investments into education by the Education Summit Advisory Group aimed at “reducing disparities between white and African-American students and other historically underrepresented students of color.”

“If we’re going to be honest that we’re going to have a war on sugar and we’re concerned about obesity and diabetes and we’re concerned about health, I think we need more money dedicated to that very cause,” said Council Member Debora Juarez, according to KIRO 7 News.

Last month, more than 150 small business owners asked Murray to reconsider the tax in a letter, while the Washington Beverage Association has also lambasted the tax as being detrimental to small businesses in the city.

In response, Murray revised his proposal, lowering the tariff to 1.75 cents-per-ounce from its original target of two-cents-per-ounce, while broadening the sugar-sweetened category to include diet sodas. The decision was influenced by statistics showing more wealthy white people drink diet sodas, while minorities primarily consume regular sodas.

A vote on the tax could come as early as next month and would take effect in January.

Soda Industry Responds

Soda company executives decried sugary drink taxes during the Beverage Forum conference in Chicago last week, with James Trebilcock, executive vice president and chief commercial officer for Dr Pepper Snapple Group, dismissing such efforts as a “money grab around municipalities going bankrupt.”

The major soda industry players, represented by the American Beverage Association, has been aggressive in confronting recent tax proposals on sugar-sweetened beverages, pouring millions of dollars into unsuccessful anti-tax campaigns in cities like Philadelphia and Berkeley, Calif. Yet despite frequently outspending the opposition, their message that such tariffs would hurt small-scale retailers and beverage wholesalers has fallen on mostly deaf ears.

“It’s a devastating tax and there is no rationale for what they did,” Trebilcock told Food Dive. “We’re fighting as an industry to educate people about the punitive nature and the fact that it’s very regressive.

Also speaking at the event, Coca-Cola North America President Sandy Douglas told the audience that “the sustainable change that consumers are creating for themselves is a far better way of orchestrating change” than “shocking government intervention” in the form of taxes.

“Taxing people and discriminating against businesses that create lots of jobs and retail stores in cities where there is already a dearth of fresh food, and you go out and take out a category that is very profitable to them– it takes you back in a really disruptive way,” Douglas said, according to Food Dive.

Soda Tax Bills Stall in New England

A proposed tax on sugar-sweetened beverages in Massachusetts is set to be discussed by the state’s Joint Committee on Revenue, despite being withdrawn during a budget hearing in the state House of Representatives.

Rep. Kay Khan (D) and her eight co-sponsors announced their withdrawal of the tax, originally presented as an amendment to the House budget bill, on Wednesday. Khan’s chief of staff told Bloomberg that the representative had filed legislation related to the tax and “will continue to advocate for its advancement this session.”

The bill would have placed a one-cent-per-fluid-ounce tax on drinks with between five and 20 grams of sugar, up to 12 ounces. Drinks with more than 20 grams of sugar in bottles larger than 12 ounces would have been taxed at two-cents-per-fluid-ounce. Drinks with less than five grams of sugar and bottled in containers of 12 fluid ounces or less would have been exempt.

Elsewhere in the region, a proposed one-cent-per-fluid-ounce tax on sugar-sweetened drinks in Connecticut failed to move out of the state’s Finance, Revenue and Bonding Committee after being introduced in April.

The bill received a public hearing last month, during which pro- and anti-tax advocates argued along familiar lines. Supporters said that the measure could provide between $85 and $141 million in revenue to fight childhood obesity and fund other public health programs, while critics from the business community portrayed it as a punitive act that would hurt the state economy.

This marks the second stalled effort to tax sugary drinks in Connecticut, after the state legislature’s public health committee failed to approve a similar measure earlier this year.