Berkeley soda tax hurts hard-working people who are trying to make ends meet
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A recent opinion piece in The Hill, Soda Taxes are a Sweetener for Public Health Efforts said that a beverage tax in the California city of Berkeley is working, and we no longer need to rely on conjecture to determine its effectiveness.

The author of the piece, pediatrician Lynn Silver, is right that we no longer need to rely on theory. That is because the facts show that the Berkeley beverage tax is hurting the small businesses that provide jobs for people who live paycheck to paycheck in the city, and is not delivering on its promise of improving health.

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According to the latest internal distribution data from major beverage manufacturers, beverage sales in Berkeley have fallen by 24 percent since the tax went into effect in 2015. Outside the city, beverage sales at border stores declined just 5 percent. This smaller than average decline indicates that a significant portion of Berkeley consumers are going outside the city to buy untaxed beverages.

 

This means that Berkeley businesses are suffering a devastating reduction in revenue. Corner stores, groceries, cafes, restaurants, and other small businesses that rely heavily on beverage sales are being especially hard hit, hurting working people who are trying to make ends meet in a wealthy city that is pricing them out.

Silver says that a May analysis she collaborated on for the Public Health Institute shows that sales tax revenues in Berkeley’s food sector rose 15 percent, which would be a positive outcome. But her study apparently did not adjust for inflation, which in the Bay area over the past two years for food services was about 10 percent. When you take that into account, and factor in that the beverage tax is part of the rise in sales tax revenues as well, most of the purported food sector growth disappears.

Silver does no better by pointing to a study done in April that was co-authored by researchers who included herself and pro-tax professor Barry Popkin. The study suggests the beverage tax did not cause “undue economic hardship.” Yet even the authors acknowledge they relied on sales data from just two grocery store chains. They did not look at the thousands of restaurants, neighborhood stores and grocers in Berkeley that operate on small profit margins. As a result, they admit their findings may not be representative of the entire population.

That study also asserts that volumes per transactions (how much a customer buys per trip to a store) are not down by much in Berkeley, so perhaps a good sign. Even if true, however, businesses are still hurt and lose sales when there are fewer transactions (less trips to a store).

This is exactly what we’ve seen not in a study but in reality, in Philadelphia, where stores have reported losing half of their beverage sales and seeing sales storewide drop by as much as 20 percent following the implementation of a beverage tax Jan. 1.

Ignoring reality is on even greater display among pro-tax advocates when the topic is health.

Calories in the American diet from added sugars in soda are down 39 percent since 2000. According to data from the 2016 Beverage Digest Fact Book, regular soda sales dropped 13 percent between 1999 and 2015, and are at their lowest level in 30 years. Despite this long-running decline in soda consumption, the obesity rate in the United States climbed from 30.5 percent in 1999-2000 to 37.7 percent in 2013-14 – a rise of nearly 24 percent. 

Shouldn’t obesity rates have gone down with the reduction in soda consumption if the two are connected?

Silver refers again to her April study as evidence that the tax improved health because it resulted in Berkeley residents consuming 6 fewer calories a day from taxed beverages. But this decline was labeled, “not statistically significant,” by the study’s own authors. The study then went on to say that Berkeley residents wound up increasing their total calorie intake from beverages because they ratcheted up by 32 calories a day their consumption of untaxed, high-fat beverages like milk shakes, yogurt smoothies and horchatas. That is five times the calorie decrease, and “statistically significant,” according to the study.

The evidence is in. Berkeley’s beverage tax is a lose-lose. It’s targeting low-income and middle-income families, hurting their pocketbooks, their jobs, their small businesses, and making income inequality worse. Falling soda consumption is not driving rising obesity rates. Those who make this claim are unfortunately diverting us from real solutions to serious public health challenges.

Brad Williams is a consultant at Capitol Matrix Consulting and for the American Beverage Association, which represents soft drink and other beverage companies.


The views expressed by contributors are their own and are not the views of The Hill.