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  • USA Today - August 1, 2016

    Soda taxes fall flat: Our view

    Better-informed consumers, not surcharges, can help prevent obesity.

    The latest attack on America’s expanding waistlines is aimed at your wallet, as health advocates and lawmakers hope to tax consumers out of drinking so many sugary drinks.

    In Philadelphia, which hosted last week's Democratic convention, a tax of 1.5 cents per ounce on sugary drinks, and even on artificially sweetened diet drinks, will go into effect in January — making it the first major city with a soda tax. Voter initiatives for similar taxes will be on the November ballot in Oakland, San Francisco and Albany, Calif., and likely in Boulder, Colo. A similar measure passed in Berkeley, Calif., in 2014.

    Americans, more than one-third of whom are obese, would be better off if they did cut back on sugary drinks. But efforts to tax people out of the habit are likely to fall flatter than day-old cola.

    People are quick to see through ideas described as good for them but which make little sense. Why slap a surtax on sodas but not on Twinkies (135 calories per cake) or McDonalds' Double Quarter Pounder with Cheese (780)?

    And why tax diet sodas, as Philadelphia does, if the target is sugar? Maybe because the tax is a money grab disguised as a public health initiative.

    Soda taxes are heavy on intrusion and light on impact. There are better ways to encourage people to eat and drink less. And while advocates like to draw an analogy between taxing soda and taxing cigarettes, the two products are vastly different.

    Cigarettes are highly addictive. If used as intended, they can kill you. Smoking is responsible for about 480,000 deaths a year. High taxes — $4.35 per pack in New York state — are aimed at preventing price-sensitive teens from getting addicted. And over the years, they've proven their worth.

    While some people certainly crave sugary sodas and other good-tasting but bad-for-you foods, people can and do choose to use them in moderation or to stop drinking them entirely.

    Most important, soda taxes haven’t been shown to work. Take Mexico, where the obesity problem rivals that of the United States and where per capita soda consumption is the highest in the world. In 2014, Mexico added a tax of about 10% to sugary drinks. Initially, soda consumption dropped by nearly 2%, but in 2015 it came roaring back, rising about 2.7% and hitting a new peak, according to Canadean, a research and consumer insight firm.

    More effective ways already are being used to change people’s diets. The best use of government authority is to empower people with the information they need to make healthier choices.

    New York City — later joined by Seattle, about 20 other jurisdictions and the state of California — was the first to require calorie counts on restaurant menus. And starting next May, under a federal law, chain restaurants across the country will have to come clean on the calories in their offerings. Sure, consumers know that sodas are high in calories, but perhaps not how high. When they realize that a 20-ounce Coke has 240 calories, they might re-think that drink.

    Already, per capita consumption of carbonated soft drinks has been dropping, in 2015 to its lowest level since 1985, while sales of bottled water are on the rise.

    As with smoking, obesity will decrease when overeating, sugary products and super-sizes become less culturally acceptable. The government's goal ought to be smarter consumers, not higher taxes.

  • Politifact - April 25, 2016

    Fact-checking Bernie Sanders’ claim that Jim Kenney’s soda tax is regressive

    Jim Kenney’s proposed soda tax went national last week.

    Hillary Clinton led off what became a back-and-forth political battle by voicing her support for the tax at a forum in Philadelphia. Bernie Sanders chimed in later to call the tax regressive.

    Kenney fired back in an editorial on Huffington Post that his proposal, which would levy a three cent per ounce tax on distributors, was a "corporate tax" and said Sanders was siding with beverage corporations. Then Sanders responded with an editorial of his own, in Philly Mag. He basically gave an elongated version of what he said earlier in the week, which was, "A tax on soda and juice drinks would disproportionately increase taxes on low-income families in Philadelphia."

    Is Sanders correct? Or was this political grandstanding?

    Berkeley, Calif., remains the lone American city to enact a sugary drink tax. It taxes the distributors of sodas and similar beverages like sports drinks 1 cent per ounce. Studies have shown some of the cost of tax has been passed on to consumers. A Cornell study found about 25 percent of it was passed on, and a University of California-Berkeley study found the amount to be between about 50 to 70 percent, depending on the type of beverage. The prices of soft drinks were more likely to go up at supermarkets than chain drug stores.

    Carl Davis, the research director at the Institute on Taxation and Economic Policy, told Billy Penn last month soda taxes like the one proposed by Philadelphia are "imperfect:" "The first thing you realize is that it is regressive. It’s going to hit lower and more moderate income families more heavily than higher-income families."

    William Shughart, a Utah State University professor and sin tax expert, explained taxes like the one proposed by Kenney disproportionately affect lower income residents because a greater amount of their income is used on food and drinks.

    Warren Gunnels, senior policy advisor for Sanders, said in an email, "It would make much more sense to finance universal pre-school in Philadelphia by raising taxes on its wealthiest residents, who currently benefit from flat state and city tax rates. Right now wealthy Philadelphians pay state income tax of 3.07 percent, an unemployment tax of 0.07 percent, and a city income tax of 3.92 percent. That’s a total state and local tax burden of 7.06 percent. By contrast, New York City’s wealthiest residents pay a top rate of 12.6 percent."

    Such a plan would be easier said than done, according to Kenney’s administration. "Because of the uniformity clause, it’s constitutionally impermissible right now in Pennsylvania to raise the income tax rate only for wealthy individuals," said Lauren Hitt, Kenney’s communications director. "The Republican controlled state legislature would have to change the constitution and we’re not holding our breath on that one. Our kids need Pre-K now."

    Kenney has said the tax is not regressive because he believes the money will stay in the neighborhoods. His finance director, Rob Dubow, said most consumers of sugary drinks are in poor neighborhoods. When Dubow suggested distributors would absorb some of the tax, City Council president Darrell Clarke responded, "Fundamentally, I don’t believe that."

    Our ruling

    Sanders said Kenney’s proposed soda tax would disproportionately increase taxes for low income families. In the only other instance of a soda tax in the United States, studies have shown somewhere between 25 and 70 percent of the cost of the tax gets passed to consumers. Tax experts say if this tax reaches the consumer level it would affect low income residents to a greater extent.

    We rule the claim True.

  • Philadelphia Magazine - April 24, 2016

    Bernie Sanders Op-Ed: A Soda Tax Would Hurt Philly’s Low-Income Families

    I applaud Philadelphia Mayor Jim Kenney for introducing a plan to provide universal preschool for all of his city’s 4-year olds. I strongly share the goal of ensuring that every family has access to high-quality, affordable preschool and childcare.

    But I do not support Mayor Kenney’s plan to pay for this program with a regressive grocery tax that would disproportionately affect low-income and middle-class Americans.

    I was especially surprised to hear Hillary Clinton say that she is “very supportive” of this proposal. Secretary Clinton has vowed not to raises taxes on anyone making less than $250,000 per year. For reasons that are not clear, she has chosen to abandon her pledge by embracing a tax that targets the poor and the middle class while going easy on the wealthy. That approach is wrong for Philadelphia, and wrong for the country.

    Mayor Kenney wants to raise $400 million from a tax on juice boxes, soft drinks, teas, flavored coffee and other sweetened drinks. His proposal would raise the price of a $1.00 soft drink to $1.24. That will hit many Philadelphians hard, especially the more than 185,000 people in the city who are trying to scrape by on less than $12,000 a year. He twice opposed the same tax idea. He was right then. He’s wrong now.

    It would make much more sense to finance universal preschool in Philadelphia by raising taxes on its wealthiest residents who currently benefit from flat state and city tax rates. What’s more, national tax rates for wealthy Americans and corporations are much lower than they were under President Ronald Reagan. For example, the Commerce Department and other data found that corporations paid an effective tax of 31.7 percent on average during the Reagan years, but only 22.8 percent on average under President Barack Obama.

    That means more than $166 billion per year in revenue has been lost because of the influence of corporate lobbyists and campaign contributions. Not only could that money be used to make sure that every 4-year old in this country had access to a high-quality preschool, it could also provide the resources necessary to provide universal child care and preschool to every infant and toddler in America with billions to spare for other urgently needed programs.

    Mayor Kenney deserves praise for emphasizing the importance of universal pre-kindergarten. But at a time of massive income and wealth inequality, it should be the people on top who see an increase in their taxes, not low-income and working people.

    Read More here.
  • Contra Costa Times - May 22, 2015

    Barnidge: If Berkeley shoppers don't have to pay the soda tax, does it really exist?

    When Berkeley officials summoned the media last week to bask in the success of the city's new 1-cent-per-ounce soda tax -- $116,000 collected in the first month -- Councilman Laurie Capitelli summed up the essence of the program with a touch of irony.

    "What we really want to do, in 10 years," he said, "is collect no (soda) tax."

    Translation: By dramatically increasing the costs at the register -- a $2 two-liter bottle of Coke would cost 68 cents more, or a 34 percent price hike -- the city hopes to sour shoppers on purchasing calorie-laden beverages that contribute to obesity and diabetes.

    That assumes, of course, that the tax is passed on to customers, who then turn their backs on sugar-sweetened drinks. That's not what's happening in Berkeley, from what I've seen.

    Proponents of this measure have sold artificial price hikes as a way of curbing bad nutritional choices. In fact, a UC San Francisco study in 2012 concluded that if a soda tax were implemented nationwide, "a penny-per-ounce tax on sweetened beverages would prevent nearly 100,000 cases of heart disease, 8,000 strokes and 26,000 deaths over the next decade."

    When I visited Berkeley last week to go soda shopping -- hey, it was a slow day -- I discovered that a CVS store on Shattuck Avenue sold a 1.5-liter bottle of Pepsi-Cola for the same price as a CVS in Concord, which has no soda tax. In both cases, the base price was 99 cents, the deposit 10 cents and sales tax 10 cents, for a total of $1.19.

    When I asked a clerk why the extra fee wasn't added to the cost, she looked at me as if I had a tattoo on my forehead.

    Farther down Shattuck Avenue, I repeated the experiment at a Safeway store. Same result: 99 cents for the soda, 10 cents deposit, 10 cents sales tax. A Concord Safeway charged exactly the same. How can a disincentive work, if customers don't have to pay it?

    Berkeley CVS store Manager Danny Rogers said his store is simply absorbing the added cost. "We're just taking on the tax and paying it," he said. "We're still looking into should-we, should-we-not (charge customers)."

    A woman who identified herself on the phone as the Berkeley Safeway store manager (she wouldn't give her name) sounded mystified by the question. "I'll have to look into that," she said.

    The city has no authority to force merchants to pass along the first-in-the-nation tax. The way the program is structured, distributors pay a fee based on the quantity of product delivered; that charge is passed on to stores, which figure out how to afford it.

    Maybe CVS increases the cost of sunscreen. Maybe Safeway charges more for sour cream. Just because it's called a soda tax doesn't mean that's where the revenues to pay it are coming from. Maybe it's really a sunscreen-sour cream tax.

    If Capitelli was surprised by my finding, he hid it well. He said he'd hoped that retailers would pass along the fee, raise prices and curb consumption, but that decision rested with each store. Maybe such a practice will yet evolve.

    "I hope that price discourages people from buying," he said, "but equally important is the opportunity to take the revenue we get from this and educate people as to the risk they're taking consuming sugar-sweetened beverages.

    "What you're looking at now is a snapshot. We have yet to really see full implementation. I'll be surprised if most retailers don't pass the cost on."

    In the meantime, if you're out of Pepsi, feel free to shop Berkeley stores: They're selling it at a good price.

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