The bitter style of beverage taxes

State and local governments continue to consider laws that would increase taxes on sweetened beverage products based on the notion that doing so would improve the health and nutrition of their residents. However, these taxes have proven to be ineffective and discriminatory, and have no bearing on what people drink.

Taxes on sweetened beverages also do not have the tax effects expected by law. For example, in January 2017, the City of Philadelphia introduced an excise tax of 1.5 cents an ounce on sweetened beverages, with a portion of the proceeds going to be used for educational programs. The city originally forecast that after six months of beverage tax in fiscal 2017, it would raise $ 46 million, which was then reduced to $ 39.7 million. The final amount was $ 39.3 million, 14.6 percent less than the original projection. A February 2020 study by Drexel University found that a year after Philadelphia’s soda tax increase had no effect on Philadelphian drinking. A March 12, 2019 study by the University of Minnesota Carlson School found “no significant reductions in calorie and sugar intake” in the city.

The District of Columbia is the newest jurisdiction to emulate this failed concept. Six city council members introduced the Nutrition Equity Act 2021 amendment on March 29, 2021, which means only one additional councilor is required to pass the laws. The bill would introduce a 1.5 cents an ounce tax on sugary drinks in the District of Columbia and create a Nutrition Equity Catalyst Fund to teach elementary school students how to eat healthier. While many sweetened beverages sold in stores are taxed, sweetened coffee beverages sold by large coffee chains are not subject to beverage tax. The Alliance for an Affordable DC has argued that families who buy basic beverages at the grocery store are taxed, but those who can afford expensive coffee are not taxed. All sin taxes are regressive, and the DC tax on sugary drinks will be no exception.

Seattle added a 1.75 cents per ounce tax on sweetened beverages that went into effect Jan. 1, 2018. To introduce this tax nationwide, six senators introduced SB 5371 on January 28, 2021. The tax would apply to every ounce of soda, juice, or sweetened coffee beverage with more than 20 calories in a 12-ounce serving sold. Lewis Bumsted, who runs two grocery stores in Washington, said the tax would force him to raise prices for customers struggling during the pandemic.

Rhode Island is also considering a 1.5 cents an ounce tax on sweetened beverages. The aim is to provide the recipients of the Supplemental Nutrition Assistance Program with funds to receive half a discount on fresh produce “to combat food insecurity”.

Taxes on sweetened drinks can also lead residents with lower taxes on drinks to travel to other neighboring communities. Philadelphians traveled to nearby jurisdictions, and that’s even more likely if the District of Columbia introduces its beverage tax, as everyone lives within five miles of Maryland or Virginia. Washington people could travel to Idaho, which has low taxes, or Oregon, one of the five states in the country that does not charge sales taxes, including a tax on sweetened beverages. Shopping online also allows residents of states with high beverage taxes to avoid the additional cost.

Beverage taxes have been shown to be detrimental to small restaurant owners and their families, especially those who struggled to make ends meet during the coronavirus pandemic. Even before the pandemic, many small businesses were struggling to make ends meet, and these regressive taxes will hurt them even more.

Taxes should be flat, low and broad, rather than targeting specific products and industries. Cities and states should not impose additional discriminatory taxes on items that place a greater burden on those who can least afford them.