‘This industry will stop at nothing’: big soda’s fight to ban taxes on sugary drinks

The soda industry has long lobbied against soda taxes in the US but recent evidence shows these extra charges have a positive effect

The battle over soda taxes has been bitter and long-running. Advocates argue increasing the price of sugar-laden drinks will reduce consumption and improve public health; for opponents, it is simply another cost for those least able to shoulder it, or an example of government overreach.

For years, research painted a mixed, often confusing, picture of the effectiveness of these taxes, while the soda industry poured millions of dollars into efforts to stop them. But mounting evidence suggests they are having a beneficial effect.

Researchers in California and Illinois have found soda taxes lead people to consume less sugar. A meta-analysis, published in 2021, found that in five places with soda taxes, demand for sugar-sweetened drinks fell by 20% on average – although some was offset by people shopping over the tax border.

In July, a study of more than 1,100 families in three cities – Philadelphia, Seattle and San Francisco – found that while lower-income families spent a higher proportion of their income on soda taxes, the amount their communities got back through tax-funded programs was greater.

The taxes provided a “large net transfer of funds” to lower-income populations, according to the research from the University of Washington and the University of Pennsylvania. “A sweetened beverage tax may be an equitable public policy,” the study concluded.

The question of whether soda taxes work is an important one. Sweetened drinks are the single largest source of added sugar in Americans’ diets. Multiple studies have linked them to diabetes, obesity, cancer and heart problems. These negative impacts are disproportionately felt by Black and Latino people, who are particularly affected by diabetes and obesity. In some Black and Latino neighbourhoods, it can be cheaper to buy soda than milk.

Many public health experts advocate for the current patchwork of soda taxes in the US to be extended. “I absolutely believe the public health community would love to see these taxes implemented at the state or national level,” said Lisa Powell, a professor of health policy and administration at the University of Illinois at Chicago.”

But the soda industry continues its well-funded campaign against them. And it appears to be winning. No sugary drink taxes have been enacted since 2018.

The former New York governor David Paterson proposed a soda tax back in 2008. He was unsuccessful, but the idea began to catch the attention of cities and states across the country.

In 2015, Berkeley, California, became the first place in the US to tax sugary drinks. Set at $0.01 an ounce, it was intended to reduce consumption and provide money for community programs.

The soda industry spent at least $2.4m to oppose the levy, according to California campaign finance records. Even though it was unsuccessful, this wasn’t the end of the war.

Spearheaded by industry group American Beverage Association, the industry changed tactics, throwing its lobbying might and millions of dollars behind a California ballot initiative that would have made it nearly impossible for cities to pass any new local taxes at all.

It worked. In 2018, state lawmakers agreed to ban soda taxes until 2031. In exchange, soda companies dropped the ballot measure. Cities that had been preparing to propose their own taxes were forced to stop. Furious legislators accused the American Beverage Association of essentially blackmailing the state.

“I’ve never seen anything quite as cynical as the move the soda industry made to initiate a state ballot measure as a gun to the legislature’s head,” said California assemblyman Richard Bloom, a Democrat from Santa Monica. “It was just a stark reminder that this industry will stop at nothing to protect its interests.”

After Berkeley’s tax, public health advocates had predicted a wave of new soda taxes across the US. Yet just a handful of other cities – including Philadelphia, Oakland, California and Boulder, Colorado – passed taxes in the years since, in part, due to industry opposition.

After Seattle started taxing sweetened drinks in January 2018, the industry proposed a statewide ban on cities and counties passing soda taxes and spent $22m lobbying for it. Framing them as “grocery taxes”, it claimed the ban would help keep people’s shopping affordable. In November 2018, nearly 56% of Washington voters approved the ban.

Michigan and Arizona have also banned soda taxes after facing industry pressure. And even unsuccessful bans have ultimately been effective in some cases. Proposed bans in New Mexico, Illinois and Pennsylvania were withdrawn after communities canceled soda taxes.

But not all attempts have been successful. Oregon voters rejected a soda tax ban in 2018.

Eric Crosbie, a public health professor at the University of Nevada at Reno, says state tax bans are modeled after similar initiatives pushed by the tobacco industry after cities started cracking down on smoking in the 1980s.

As with tobacco, soda tax pre-emption laws are often inserted into unrelated legislation, he said. “The problem is it’s very difficult to monitor. They won’t call it a soda tax bill, and a lot of times they can add language at the last minute.”

In the years since the last soda tax was passed, research suggests the taxes that remain have helped reduce consumption and increase equity.

Berkeley’s soda tax has raised up to $1.5m a year for health programs, gardens and healthy eating education for children, said Xavier Morales, a member of the city government commission that allocates soda tax revenue. “I think Berkeley has set a bar about how to center equity in our tax,” he said. “About 90 cents on the dollar actually goes to the community.”

In Philadelphia, which has taxed sweetened beverages since 2017, the revenues have helped the region add jobs, according to a 2021 Rutgers University study, mostly because the program has funded childcare that allows parents to go back to work.

There’s also evidence of longer-term consumption trends. An analysis of Seattle’s soda tax, published in December 2021, found that two years after its implementation, there was a 23% drop in grams of sugar sold through taxed drinks compared with sales of those products in Portland, where there was no soda tax.

“Taxes may permanently reduce the demand for sugary beverages,” wrote Lisa Powell, a lead author on the study.

And three years after Berkeley’s tax took effect, people were consuming half the amount of soda and 29% more water, UC Berkeley researchers found in a 2019 study.

But a recent study by the University of Georgia into Philadelphia’s soda tax found that, while consumption of sugar-sweetened drinks fell by 31%, people either switched to other sugary treats or traveled to nearby towns, undermining the reduction in soda consumption. Other studies, however, have concluded cross-border shopping has a relatively minor effect on declining demand.

Felipe Lozano-Rojas, lead author of the study, wrote: “Can we influence behavior through taxation? Yes, but only if you enact a policy at broader levels of government, such as at the state or national level that prevents people from cross-border shopping.”

Consolidating US soda taxes into state or federal policy is something most in the soda industry remain firmly against.

“Taxes won’t make people healthier, just poorer,” the American Beverage Association says on its website. William Dermody, a spokesperson for the ABA, said in a written statement that soda taxes are “discriminatory” and cause prices “to rise dramatically on everyday grocery items, hurting working families, small businesses and their employees”. He did not explain how the taxes lead to those effects, except to say they increase the price of sweetened drinks.

The ABA says the industry plans to reduce calorie consumption from beverages by 20% by 2025. The association also works with local organizations to reduce sugar consumption in some US communities, Dermody said.

Courtney Gaine, president of the Sugar Association, another industry group involved in anti-tax efforts, said soda taxes have questionable health benefits.

 

 

cover photo: Researchers have found soda taxes lead people to consume less sugar. Photograph: Stephanie Phillips/Getty Images/iStockphoto