WASHINGTON, July 5, 2017 - A tax on sugary beverages went into effect on Saturday in Boulder, Colorado, and opponents of the levy are worried it will have results similar to what’s happening in Philadelphia.
There, a 1.5-cent per-ounce sugar tax was signed into law in June 2016. Since then opponents of the assessment – including the American Beverage Association – point to job losses and lost revenue because consumers didn’t stop drinking the assessed beverages, they just bought them somewhere else.
“If you want a case study in how these taxes hurt consumers and businesses, you should look at Philadelphia,” Lauren Kane, ABA’s senior director of communications, told Agri-Pulse.
A recent public hearing on the subject had to be cancelled after protesters in support of it took control of the hearing room and never relinquished it. The lawmakers who convened the hearing say they’ll reschedule something in Harrisburg, the Pennsylvania state capital. In Philadelphia, the tax wasn’t really sold as a public health concern, but rather as an avenue to fund education and recreation programs. In testimony that was submitted for the hearing, Philadelphia Mayor Jim Kenney and City Council President Darrell Clarke say the tax is working, because these projects have received funding.
“All of this progress will disappear if the beverage industry is successful in their continued efforts to repeal this tax, either through courts or legislation,” they said in a joint statement, referring to legal efforts being pursued by ABA and others.
But the tax hasn’t just been opposed by the beverage industry – community and labor groups have been vocal in their opposition as well. Danny Grace, an officer of Teamsters Local 830 in Philadelphia, blamed the tax for lost jobs that have had a domino effect.
“The tax has resulted in drastically fewer products being sold in the city, which means less trucks needed for deliveries, which means less Teamsters drivers needed,” Grace said in written testimony. “Fewer delivery trucks on the roads means less need for Teamsters’ mechanics to maintain and repair the trucks. Less products being sold also means less need for Teamsters’ production and warehouse personnel. And decreased sales of beverages means less need for Teamsters’ merchandisers in corner convenience stores and supermarkets.”
The tax in Philadelphia has a lower assessment than Boulder, which now slaps a 2-cents per-ounce tax on beverages with more than five grams of added sugar per 12 ounces. That adds an extra 40 cents to a 20-ounce bottle and an additional $2.88 on a 12-pack of 12-ounce cans.
A similar tax was set to go into effect last Saturday in Cook County, Illinois, until a judge blocked it Friday afternoon. Retailers in the area raised questions that are common in the soda tax debate: How is it assessed? What products does it apply to? What should a retailer do if their in-house technology can’t compute differences between products? Does the tax apply to users of the Supplemental Nutrition Assistance Program?
The ABA’s Kane said a better approach to improving public health than this form of taxation might be product reformulation, something she says is underway in the industry. In addition to offering the same products with lower amounts of sugar, companies are experimenting with offering the same products in smaller quantities – 8-ounce cans, for example – with hopes consumers could still taste their product of choice, but at a lower level of consumption. Kane said consumers are responding to the efforts.
“I think it’s better to work with consumers and support them in their efforts rather than punch them in the nose with a tax that has never been proven to improve public health.