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What We Know (and Don’t) About Soda-Pop Taxes

We know why it’s unpopular, and we know how best to sell it to the public (even if that didn’t happen in Cook County). We don’t know nearly as much about their effects on health.

Share a Coke with Toni?   Photo: Phil Velasquez/Chicago Tribune

The Cook County soda tax has proven remarkably unpopular—especially on the heels of the fairly well-tolerated bag tax—and there’s evidence, even if it’s early, that it could put the “politically invincible” Toni Preckwinkle at risk in the upcoming election.

So what went wrong?

There are two good places to start. First, Hal Dardick at the Tribune runs through how Cook County’s tax specifically became a political war. Second, Vox’s excellent health reporter Sarah Kliff shows how there’s just not a constituency for the tax. At best, self-identified liberals support them by a mere 55 percent. Democrats are just 50 percent in favor, compared to 44 percent of Republicans, an unusual lack of ideological division for a political issue. And as Dardick demonstrates, Cook County’s tax is even more likely to stir up opposition than other cities’ taxes.

Some of the problems have been design and implementation. It’s a bit confusing; I got 17 of 22 on the Tribune’s quiz, and was particularly surprised that chocolate milk isn’t taxed (if milk is more than 50 percent of the beverage it’s exempt). Even if you can navigate what is and isn’t taxed, there have been problems with stores not taxing what is taxed and taxing what isn’t, like LaCroix, theoretically the kind of beverage that you’d want the tax to push people towards. Fountain soda is taxed, including soda used as mixers in bars… but barista-made calorie bombs at places like Starbucks aren’t taxed… but Starbucks canned drinks with sweeteners are. Accounting for refills is confusing. Purchases made with SNAP funds cannot legally be taxed, so retailers have had to make workarounds.

How much does it cost us?

Beyond the above reasons, a lot of people are just angry at the additional cost. If I bought, say, three 12 packs of 12-ounce Pepsis at $3.99, which my local Jewel is offering right now, that’s an additional $4.32 on $11.97 worth of soda, or 36 percent. The $1.55 20-ounce bottles in our vending machine come with a 20-cent tax, or 13 percent.

On average, adults consume about 145 calories per day from sweetened beverages—actually a substantial decline from 2000, when it was 196, though the decline has stagnated. Consumption varies a lot between different groups and regions, but let’s assume you’re an average drinker and that your consumption comes from regular Coca-Cola. My 20-ounce bottle has 240 calories, so that’s 12 calories per ounce.

(One of the criticisms is that since lower-sugar drinks are taxed at the same rate as higher-sugar drinks, if you got your 145 calories from one can of Coke instead of two Arizona green teas you’d be paying much less in tax… but let’s continue.)

Consuming 145 calories per day means almost exactly 12 ounces of Coke (so, one can), which is twelve cents per day, or $43.80 per year. It’s not an immense amount of money, but for a family of four—children currently consume almost the same number of sweetened-beverage calories per day as adults—it’s $175.

Who does it affect?

Sweetened-beverage consumption varies a lot, and that’s one of the issues with taxes on them. About a quarter of young adults and 10 percent of adults have heavy (at least 500 calories a day) soda consumption. For them, the soda tax would be $150 a year or more, if they’re drinking regular Coke. Of course, reducing the intake of heavy consumers is the goal.

More worrisome is the disproportionate impact on people of low socioeconomic status, who drink more sugary drinks on average than those with high-SES. One 2010 study—using data from 2006, so it’s a bit old—found that the lowest income quartile in their sample consumed 183 calories per person per day in sugar-sweetened beverages, compared to 139 in the highest quartile. So for low-SES households that’s 15.25 ounces per day, or $56 per year, per person—a fair amount of money for larger families. That makes the tax pretty regressive on average, both in absolute terms and in relation to income.

Do soda taxes actually cut consumption?

Yeah, they probably do. In Philadelphia, distributors have reported a decline in sales of 30 to 45 percent after that city passed its soda tax. Sales declined 10 percent in Berkeley, which had low soda consumption already, according to a study that was funded by Bloomberg Philanthropies (a group now pushing the soda tax in Cook County).

In Mexico, which has had a soda tax since 2014 and has been something of a model for American cities, soda sales dropped six percent the first year and 10 percent the second year. Similar results have been reported in European countries.

One caveat: Soda consumption has been in decline since the late 1990s in the United States, while bottled-water consumption has been on the rise for 30 years. Ironically, this is one reason Chicago has a five-cents-per-bottle bottled-water tax.

And does that reduce obesity?

That’s a bit trickier. Consumption is relatively easy to measure: look at receipts, ask  people to self-report, run the numbers. But reduced consumption doesn’t necessarily mean people aren’t seeking out those calories elsewhere (like chocolate milk, for example).

Relatively high sweetened-beverage taxes are also very new, so there hasn’t been much time to measure the very complex relationship between soda consumption and health; there’s not much data on it. (One reason the tax is so high is that low taxes don’t seem to work.) The literature, looked at as a whole, suggests large taxes would lead to weight loss of a couple pounds on average, with some positive effects on diabetes, like a 2011 Cook County Department of Health study that estimated a statewide penny-per-ounce tax would prevent 3,500 new cases of diabetes in its first year. (Cleverly, it quotes Adam Smith in The Wealth of Nations: “Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.")

And is that the point?

No one has predicted dramatic effects on overall health. Most likely we’ll see some health gains because the existence of the tax itself is a reminder that soda’s not good for you; plus, if health improvements are the goal, the revenues generated by the tax would hopefully be used to address obesity and diabetes.

But there were warnings in the literature that Cook County could have heeded, like a 2013 national public opinion survey:

Findings indicated more people agreed with anti-tax versus pro-tax arguments. The most persuasive anti-tax arguments were as follows: arbitrary in targeting only one unhealthy food (60%), quick way for government to fill budget holes (58%), unacceptable intrusion into people’s lives (53.8%), and harmful to the poor (51%). Highest agreement with pro-tax argument that [sugary beverages] were the single largest contributor to obesity (49%) and would raise revenue for obesity prevention (41%).

That’s pretty much how it’s played out. The Cook County soda tax could end up adding to the literature on health effects, but only if it sticks. Right now, it’s looking like more evidence for how not to implement such a tax.

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