Photographer: Daniel Acker/Bloomberg

On the Ballot Nov. 8: Clinton, Trump, Obesity, and Coke

The $73 billion soda industry faces four ballot initiatives to tax its products to protect Americans’ health. It says taxes don’t work.

There's another showdown this Election Day, besides Clinton vs. Trump. The $72.6 billion soda industry is facing four initiatives to tax the sale of sugar-sweetened beverages, one of the biggest battles yet in the U.S. soda wars.

If the initiatives—three in California's Bay Area cities and one in Boulder, Colo.— succeed, and spread as others have, the push to tax soda could ultimately affect the health of millions of Americans.

"The science on the connection between sugary drinks and health is rock-solid at this point," said David Goldberg of Healthy Food America.

The American Beverage Association, which represents the industry, says it's behind the public-health goal but not the taxes. It points to Mexico, where levies were imposed and the drop in calorie consumption per person was minimal.

Now, researchers from Harvard's T.H. Chan School of Public Health have weighed in with studies on the four U.S. cities that show the impact a soda tax could have.

In the Bay Area cities (Albany, San Francisco, and Oakland), the researchers say, the taxes would lead to a 20 percent drop in soda consumption, prompting a 4 percent decline in the incidence of diabetes after a few years, as well as 6,000 fewer cases of obesity by the end of 2025. The various benefits of the tax would lead to health-care savings of $54.9 million over 10 years, they predict, and the tax itself would raise $22.2 million a year for children's health programs. These numbers will go up once Berkeley, whose tax has been in effect since March 2015, is added to the analysis, Goldberg said. Healthy Food America commissioned the studies.

In Boulder, where the tax would be twice that of the Bay Area, the researchers predict a 10 percent drop in diabetes incidence after a few years, 940 fewer cases of obesity by 2025, a $6.4 million savings in associated health costs over 10 years, and as much as $3.8 million a year for health programs, including those to increase access to healthy foods.

The proposed taxes, at a penny an ounce in the Bay Area and 2 cents per ounce in Boulder, would apply to beverages with added caloric sweeteners. Milk products, 100 percent fruit juice, and artificially sweetened beverages aren't included.

Following the passage of similar initiatives in Philadelphia and Berkeley, support for soda taxes isn't coming only from public-health advocacy groups. These initiatives also have money behind them, including from Michael Bloomberg, who as mayor of New York tried to ban jumbo cups of sugary drinks in restaurants, movie theaters, stadiums, and arenas, and energy billionaires Laura and John Arnold. Collectively, the three have contributed more than $18 million to support the Bay Area soda tax campaigns, according to a report by Politico.com that says the industry, for its part, has raised over $19 million for the San Francisco fight alone. (The former mayor is majority owner of Bloomberg LP, which publishes Bloomberg.com.)  

"This is a political maneuver financed by out-of-town special interest groups," the beverage association said in a statement. "That is why America's beverage companies are committed to being part of real solutions." It cited smaller packaging sizes as an example.

While the study paints an optimistic picture of a soda-taxed municipality, the model relies on a number of assumptions.

For example, it assumes "100% pass-through of the tax over the 10 years," based on evidence from Mexico and France, where retailers passed the cost on to consumers, instead of absorbing it themselves. (Technically the tax is on distributors.) But the researchers note that "short-term studies for the local tax in Berkeley indicate less than complete pass-through." The model also uses consumption data, which require self-reporting of soda intake and are notoriously unreliable. 

"It's impossible to know what the pass-through is going to be," said Dan Taber, vice president of research and evaluation at Healthy Food America, "but there's multiple ways that the tax could decrease consumption." Soda tax campaigns also raise awareness, he said, which can have a big impact on behavior.

As for the unreliability of self-reporting, Taber said the results have been consistent with what happened in Mexico, where the tax led to lower soda sales. "That gives us more confidence in the results," he said. A tax on sugary beverages has "enormous potential to reduce disease rates and improve quality of life," Taber said.

"Nearly half of added sugar–46 percent–comes from sugary drinks, and regular consumption of those drinks has been closely linked with much higher risk for diabetes and heart disease," Goldberg said. 

Healthy Food America's website documents the studies corroborating these findings.

(Corrects and attributes the industry's reported spending on the soda tax fight in the Bay Area.)
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE