Sugary Drink Taxes Gaining Momentum

Taxes on sugary drinks that met with opposition in decades past are gaining favor. In 2014 Berkeley, California, led the movement to impose a “sugary beverage tax” and was followed by San Francisco, Philadelphia, and Cook County, Illinois.

Seattle will consider imposing a 2-cents-per ounce tax this month.

When it comes to raising taxes, voters are much more willing to target sweetened beverages than to expand sales taxes or increase the state income tax in Illinois, according to a poll financed by the American Heart Association (AHA). Chicago will be subject to a penny-per-ounce Cook County beverage tax starting July 1.

County residents support the tax 56 percent to 41 percent with 60 percent of those residing in Chicago indicating their support.

Approval of a 1-cent tax raises the price of a typical six pack at least 72 cents and $1.44 for a 24-ounce bottle. In Seattle, the tax would add $2.88. Beverages usually named in legislation are carbonated soda, sports drinks, sweetened tea or lemonade and any other drinks with added sugar (except, milk, water, naturally sweetened 100 percent fruit juice and artificially sweetened drinks). In Chicago, the tax is expected to generate $224 million a year.

Coke with ice in glass

“Americans are eating and drinking too much added sugars, which can lead to health problems such as weight gain and obesity, type 2 diabetes and heart disease,” according to the U.S. Center for Disease Control. Sugared beverages account for 46 percent of the added sugars consumed by Americans, according to the CDC. Chicago’s obesity rate climbed from 12 percent in 1990 to 30 percent of the adult population. A recent survey showed 62.2 percent of adults there are overweight.

Local retailers expressed concern. “It certainly will set a new standard for bad tax policies,” Rob Karr, president of the Illinois Retail Merchants Association, told the Illinois Times. “It’s not a reliable tax source. It’s an administrative nightmare and it continues to profit a narrow base when Illinois needs to go in the opposite direction,” he said.

“Evidence from controlled experiments involving humans show that ingesting too much sugar leads to obesity, which increases the risk of diabetes and heart disease,” said Dr. Jim Krieger, a professor at the University of Washington and executive director of Healthy Food America (HFA). His comments appeared in the Seattle Times.

The Harvard School of Public Health estimates the average can of soda contains 150 calories, mainly from added sugar. The AHA recommends no more than 100 calories of added sugars for women and 150 calories for men, yet two thirds of American youth drink a can per day and 30 percent drink two. About half of all Americans drink a sugary beverage daily. Diabetes killed 1.5 million in 2012, according to the World Health Organization (WHO) which supports taxation. France was one of the first countries to tax these beverages followed by Mexico in 2013 and the U.K. in 2016.

Worldwide the market for nonalcoholic beverages was estimated at $1,548 billion in 2015, and will reach $2,090 billion by 2022, growing at a CAGR of 4.4 percent from 2016 to 2022, according to a report by Allied Market Research (AMR). Despite a downward trend in the U.S., soft drinks are expected to retain their dominant position, in terms of revenue generation during the forecast period, according to AMR.

Sources: Seattle Times, Illinois Times