Berkeley and Its Soda Tax

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The financial entity known as Bank of America Merrill Lynch advised its constituents of the many juicy opportunities for entrepreneurs and investors who wish to “play the global fight-against-obesity theme.” Many countries around the world have instituted, or at least talked about, taxes on fat, sugar, and high-calorie foods. However — and this is the message — even without selling sweetened fizzy water any manufacturer who is savvy enough to jump on the health bandwagon can still make a killing.

As we have seen, the Coca-Cola Company led the way in demonstrating adaptability to the health movement. Coke pioneered such workarounds as peddling sugar-laden drinks in smaller containers. The strategy turned out to be even more profitable than what they had been doing before. This, by the way, is a perfect example of what a money-worshipping corporation means, when it talks about creating choice for the consumer.

If results are any clue, people are already offered more choice than is good for them. What is the benefit of having 1,500 kinds of soda if they are all equally damaging to the health?

Shots fired

The idea of a soda tax popped up sporadically, here and there across the country, but never quite caught on, until the West Coast showed leadership. Journalist Lizzie Wade wrote:

In November 2014, Measure D, a one-cent-per-ounce soda tax, was passed by Berkeley, California voters with a 76 percent plurality, becoming the first soda tax referendum to be implemented in the U.S.

As always, opinions differed. A lot of academically-oriented people had a horse in this race, and so did the corporate-minded ones.

Marion Nestle, who literally wrote the book on this issue — titled Soda Politics — would have been better pleased if the social experiment of taxing fizzy drinks could have more defined edges. As it was, soda consumption had been going down anyway, especially in Berkeley, so the effect of the new tax would not be clear cut.

There was also the matter of “leakage,” which is what happens when tax-avoiding consumers simply go to a nearby city (like Oakland or San Francisco) to stock up on soda pop. Bruce Y. Lee pointed out that Berkeley is a smallish, not-major city with “a much smaller lower-income population and potentially fewer people who use cost as a deciding factor of whether to drink soda.” For these and other reasons, proponents worried that whatever data eventually emerged from Berkeley’s experiment would not have much bearing on the possibilities for other cities.

Even the American Beverage Association weighed in with a warning that Berkeley was too small to base any conclusions on, and besides, its “high median income and low baseline consumption rates make it a challenging place to determine the true impact of a beverage tax…” As the old saying goes, even the Devil can quote scripture.

(To be continued…)

Your responses and feedback are welcome!

Source: “A fat investment opportunity,” Moneyweb.co.za, 04/16/15
Source: “Mexico’s Soda Tax Is Working. The US Should Learn From It,” Wired.com, 07/13/15 Source: “In a devastating blow to the beverage industry, four cities passed soda taxes,” Vox.com, 11/09/16
Source: “In Berkeley, Soda Tax Is Doing What It’s Supposed To Do,” Forbes.com, 04/18/17
Photo credit: Kai Schreiber (Genista) via Visualhunt/CC BY-SA

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