Berkeley Soda Tax Proves to Be a Success

Research indicates that sales of sugar-sweetened beverages in Berkeley, California, have decreased significantly since the local district implemented a sugar tax.

Berkeley made headlines in 2015 when it brought into force the first large-scale tax on sugar-sweetened beverages, or SSBs. By most standards, the tax is substantial at a 10 percent levy. To provide some perspective, that’s about 12 cents added to the price of a 12-ounce soda can.

While the industry has heavily resisted this move, claiming that price hikes burden consumers, research suggests that it’s actually the companies that end up paying. After all, at the consumer level, this price increase doesn’t add up to much.

Nevertheless, critics have called so-called “sin taxes” an act of government overreach. Opponents of the tax characterize it as little more than an effort by city officials to unduly influence people’s health choices.

Health authorities, however, point out that the sugar content of these beverages is far higher than the general public believes. Furthermore, substantial evidence suggests that a diet high in sugary drinks results in poorer health outcomes, like obesity and heart disease.

But the critical question remains: Does taxing sugary drinks work?

In Berkeley, after only a couple of years in effect, the short-term answer appears to be yes.

Researchers from the Public Health Institute in Oakland and the University of North Carolina looked at sales of sugar-sweetened beverages during 2016. While sales of SSBs do not necessarily indicate consumption, these figures can serve as one measure of consumer habits, albeit one with limited scope. 

That issue acknowledged, the researchers found a pronounced difference in the city when they compared sales figures before the tax went into effect and after.

In fact, sugar-sweetened beverage sales appeared to go down by 9.6 percent. Interestingly, when researchers examined sales in surrounding areas without an SSB tax, sales increased by nearly seven percent.

Does that mean that people are simply traveling farther for their sugary drinks? While not out of the question, beverage sales actually increased in Berkeley during the data-gathering period. And that would suggest that people simply made different choices.

Another interesting finding is that, within Berkeley’s limits, sales of non-sugar sweetened beverages also increased. In fact, following the introduction of the tax, bottled water sales went up by 15.6 percent.

“I would say the Berkeley tax was a home run,” Dr. Lynn Silver, author of the study, explained. “During the first year of the tax, people bought fewer sugary drinks, and more healthy beverages like water, unsweetened teas and milk. Grocery bills did not go up and store revenue did not go down.”

Why is research on sugar-sweetened beverage taxes important?

Wide-scale research on this area of policymaking is actually hard to come by, chiefly because the tax is a relatively new idea.

Mexico implemented a tax on SSBs in January of 2014, and there has been significant debate about its effectiveness. The numbers suggest that there was a modest — but not insignificant — six percent reduction in sales of taxed beverages in the first year of that policy, a trend that new figures show held true in its second year of implementation too.

What’s more, the study notes that the sugar tax produced a nine percent reduction in sales of SSBs to lower-income households.

And this finding is perhaps more instructive. People who are economically disadvantaged often must rely on food products that are not as nutritionally beneficial — sometimes because this is all they can afford. The fact that the tax appears to have changed consumer behavior, and potentially shifted choices to more healthy products appears promising.

Returning our attention to Berkeley, it’s important to note that this area of California is relatively wealthy. The fact that the tax appears to have produced a shift in consumer purchases in this region suggests that SSBs can be used to modify spending without necessarily removing choices from the market or unduly burdening either retailers or consumers. After all, the average grocery bill remains about the same.

It’s worth pointing out that the first year of the tax in Berkeley only applied to big-chain retailers. A gradual rollout to smaller shops may produce more pronounced results.

Nothing in these results is concrete, of course. However, data gathering like this is important for informing public policy. For now, there seems to be a clear pattern emerging: Taxes on SSBs can affect consumption from the top down without burdening poorer families.

A critical test will be to see if these changes produce measurable health results by funneling the money collected from these taxes into childhood obesity prevention and wider health initiatives.

Going forward, this data may help states and cities, like Seattle, where taxes on SSBs are being proposed and hashed out.

Photo credit: Thinkstock.

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Paulo R
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Paulo R
Paulo Rabout a month ago

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Paulo R
Paulo Rabout a month ago

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Paulo Rabout a month ago

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Marie W
Marie W2 months ago

Thanks for sharing.

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