How Much Should a Coke Cost?

It won’t be long before the debate over soda taxes goes national.

By Nathan Pippenger

Tagged Public HealthTaxes

However quaint it may seem at a moment when a major party candidate has descended into open authoritarianism, it will soon be time—assuming the country avoids utter disaster on November 8—to start discussing small-bore policy issues again. For a preview of one soon-to-be national debate, take a look at the Bay Area’s soda tax dispute: Three cities, including San Francisco and Oakland, will vote next month on ballot initiatives to impose taxes on sugary drinks. The beverage industry, which has launched a massive push against the effort—in August, Politico reported that pro-tax groups in Oakland had spent three percent of what the industry had—has centered their strategy on rebranding the idea as a “grocery tax” (since store owners could, in theory, absorb the cost of the tax by raising the price of any goods). That clever bit of marketing could have important political consequences. During the Democratic primary, Philadelphia’s city council introduced a soda tax as a way of financing universal pre-K, and Hillary Clinton endorsed the policy. If she decides to pursue some version of that idea nationally, the rollout strategy will take cues from this fall’s campaign in the Bay Area—and failure there could doom a nascent national push.

The rationale for a sugary drinks tax seems straightforward: It’s less intrusive than an outright ban (which Michael Bloomberg attempted in New York), it discourages consumption of a product that’s terrible for your health, and it could generate needed revenue for programs that would benefit the same people who disproportionately consume sugary beverages. But therein lies the objection: Soda taxes are regressive. This was the reasoning behind Bernie Sanders’s opposition to Philadelphia’s soda tax scheme. “It would make much more sense to finance universal preschool in Philadelphia by raising taxes on its wealthiest residents,” wrote Sanders in April. The beverage industry is happy with this framing, which nicely complements their rhetoric of a “grocery tax” that unfairly hits poor consumers. But as Mother Jones has reported, the best research on this question has found that soda taxes do, in fact, raise prices on soda itself and reduce its consumption in poor neighborhoods. That’s what researchers have found in Berkeley, which passed such a tax two years ago.

Berkeley’s experience supports the public health argument for a soda tax, and similar findings in Mexico undermine the argument that soda taxes are regressive—since poorer soda drinkers tend to change their consumption habits in response to higher costs. Earlier this year, The New York Times paraphrased one public health expert’s evaluation of the Mexican soda tax: “The rich paid the tax, and the poor reduced their soda drinking.” So while soda taxes may lead to “less choice or enjoyment” for poorer drinkers, they do not actually force them to fund whatever projects the tax is intended to support. As Vanessa Williamson has noted, this raises the question of whether the immediate cost or overall impact of a tax is more important: “In the case of a soda tax, that means you should take into account the health benefits for people who drink less soda and the societal benefits of universal pre-K. Both of these benefits would likely accrue especially to lower income people. So maybe those upfront regressive costs are outweighed by the policies’ overall progressive benefits.” A similar view is taken by experts who have advocated a national soda tax to fund universal health care. One 2009 estimate suggested that a soda tax could raise as much as $10 billion annually, while reducing consumption and improving health outcomes. The authors contended that “low-and moderate-income people would benefit disproportionately from the universal health care that this tax would help fund,” and that their health would improve if they responded “by buying fewer high-calorie soft drinks.”

Of course, this is not a perfect argument—a tax that avoids regressivity in practice because it simply places soda out of the reach of poorer consumers is not exactly a victory for fairness. But the same argument could be made about cigarettes, and the more we learn about sugar’s addictive properties and the sugar industry’s manipulation of nutrition research, the less plausible it seems to herald soda-drinking as the paradigm of a free, conscious choice. As this debate moves from the local to the national level, this matter of public perception will play a key role—in much the same way that the shifting public image of the tobacco industry has changed the balance of power in the social acceptability of smoking. As Americans debate whether they support this kind of tax, they’ll have to ask: In what ways is a Big Gulp similar to that first cigarette in the morning?

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Nathan Pippenger is a contributing editor at Democracy. Follow him on Twitter at @NathanPip.

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