Q&A: November’s Measure E, the “Soda Tax”

Voters will decide in November if San Francisco may levy a tax of 2 cents per ounce on sugary drinks.

The American Beverage Association has launched the Stop Unfair Beverage Taxes campaign to oppose the tax, and many small business owners have also voiced their dismay.

Meanwhile, public health and nutrition workers as well as city supervisors Scott Weiner and Eric Mar (the bill’s sponsors), Mark Farrell, David Chiu, Malia Cohen, David Campos and John Avalos have supported what is now known as Measure E. Supervisors Jane Kim, Katy Tang, London Breed have opposed the measure. Supervisor Norman Yee voted against the proposal but has now endorsed the measure. The tax will be applied to the distributors of drinks flavored with high-calorie sweeteners. That includes sweetened juices and energy drinks, not just sodas. Diet sodas are exempt. States that have a tax on sugary sodas have reduced obesity, but only to a small extent and none have used the funds to finance education campaigns.

Mission Local spoke with a small business owner and a nutrition writer to get their takes on the proposal.

Amy Morris Gibbs manages the Make Out Room on 22nd Street and currently serves as the president of the Mission Merchant’s Association. As a small business owner, Morris Gibbs has spoken in front of the Board of Supervisors, been a guest on KGO, and written letters to politicians to express her concern over the passing of the soda tax.

Mission Local: How does the tax apply to business owners exactly? Officially, the tax is levied on the distributor, so can you walk me through how it impacts business owners and consumers in turn?

Amy Morris Gibbs:

Businesses are dealing with an increase in rent—one of our businesses has just experienced a doubling in rent. Then there’s also the hike in minimum wage and the healthcare issue and all this stuff just adds up and it just gets tougher and tougher. It’s just become increasingly difficult to manage all these taxes and sustain our businesses.

As San Francisco merchants, we are opposed to more taxes, period. We’re not interested in paying for youth obesity as a business that has 21 and older people [as customers]. We’re not even a target audience for obesity. So it’s kind of just another annoying thing to add an additional tax just because we serve beverages that have sugar in them.

It’s just people making decisions for you.

ML: How much do you think the tax would cost you, roughly? Are there any drinks you could offer as alternatives to drinks that currently contain taxable sugary drinks?

AMG: We are not sure how much our distributors will increase the price of their sugary drinks. We get our soda syrup from Light Soda and I can guarantee they will raise the price of their syrup canisters—how much remains to be seen.

Our alternatives to sugary drinks are Diet Coke and soda water. We also get ginger beer from one of our beer distributors so the price of that will also increase as they will be taxed on ginger beer. Again, not sure what the increase will be.

We have already raised our prices this year to compensate for the doubling of our rent, but if the price increases become a negative factor to our earnings, we will have to make cost adjustments to our drink prices.

ML: How exactly do you think you would pass this on to the customer, if at all? (Raising the cost of a bar drink by 24 cents seems cumbersome).  

AMG: Again, I think we’ll have to see what the impact is from our distributors as to how we’ll have to adjust pricing. Typically, it’s a 50-cent increase.

ML: Some argue that the tax may hit low-income people harder, but don’t health complications and their costs also disproportionately affect low-income people?

AMG: The tax can affect poorer people because sugared beverages are cheaper to some extent. It’s not healthy to drink a bunch of soda and that’s an education campaign that needs to start at home. That includes exercise and better eating habits all around. We think it’s something that parents should be responsible for, not businesses paying a tax to get education. Just targeting sugared beverages is not going to change other bad eating habits.

ML: You pointed out that just taxing sugary beverages doesn’t address a whole host of bad nutritional habits. But studies indicate that sugary drinks are particularly dangerous to consumers’ health because they don’t make you feel full but still have lots of calories. Does that make it any fairer to try to discourage consumption by taxing them?

AMG: I don’t think it’s fair to have a blanket-tax that covers bars and restaurants and other small businesses when the idea is to get the message to kids to not consume sugary beverages. Adults have earned the right to manage their drinking habits. I don’t drink soda or juice, for that matter. I look at the label to see how much sugar is in beverages—and I learned that on my own. I’m a water and tea girl.

I think it’s a travesty that extreme sugary drinks are made in the first place. The law should be enforced to keep high-sugary drinks from even being produced. What’s the point? These drinks should have warning labels like cigarettes—and maybe if they showed an obese cartoon character giving himself a shot of insulin, kids would get the message. Why do we even offer sugary drinks in public schools? I didn’t have them at my elementary school or junior high—now it’s commonplace. Parents should be responsible for teaching healthy drinking habits and schools should be supporting their efforts.

ML: Do you think the states were justified in raising taxes on cigarettes?

AMG: I think it is fair for states to impose cigarette taxes because you have to be a certain age to smoke and smoking causes a host of health problems for the smoker and the people around them. If smokers don’t want to heed the health warnings for themselves, they should be made aware of the health hazards they pose to people around them when they are smoking. The non-smoking commercials that have been created from these tax revenues are pretty graphic and I’d hope that makes them more effective. You still see a lot of young people smoking but maybe they won’t smoke all their lives because they’ll get wiser and make better choices for their health. That’s all you can ask is that people have the information they need to make good judgments on their own behalf.

ML: Do you think people will be discouraged from consuming sugary drinks? The research does show a drop-off in consumption.  

AMG: I think people will continue to drink soda. People want what they want and that’s just one piece of the puzzle. If they stop drinking soda then they move on to something else. It would be more effective if we put the brakes on creating beverages with high sugar contents, like the campaign they used for trans fats.

ML: What would you like to see from city, state or federal officials instead of a tax to discourage excessive sugary drink consumption and approach the problem of youth obesity?

AMG: It’d be nice if they could attack something like this before it even comes into the city, like the warning labels on cigarettes and alcohol—It would be nice if they could put warning labels on sugary drinks.

——-

Dana Woldow began advocating for better nutrition in schools in 2002 when the principal at her son’s school wanted to get the cafeteria to stop selling junk snack foods. In a pilot program she started, the school made more money selling healthy choices than it had made selling junk food. Now, she writes about nutrition issues like the Farm Bill, food stamps and junk food marketing.

Mission Local: How is this proposal different from existing soda taxes and what can we reasonably expect to see happen if it’s enacted?

Dana Woldow: Thanks to the unlimited checkbook of the beverage industry to fund opposition to such measures, no community in the U.S. has ever succeeded in passing a soda tax that was intended both to reduce sugary beverage consumption and to raise money to help promote public health (via better school food, more drinking water fountains, improved access to healthy food in underserved neighborhoods, more nutrition education for people of all ages and more places to be physically active). This is what SF’s soda tax will do.

Many states have some kind of sales tax on soda, generally about 5 percent, but typically these taxes were enacted to raise money for a specific purpose unrelated to reducing sugary beverage purchases, or to combating diabetes, obesity, or any other negative health consequence of sugary drink consumption. For example, Arkansas passed a tax on soda in 1992 to help the cash-strapped state pay for its share of Medicaid; West Virginia passed one to raise money to build a medical school. These small taxes were never intended to discourage the sale of sugary drinks; that would have been counterproductive—the fewer people who bought the taxed drinks, the less money that would have been raised to pay for Medicaid or the medical school. Existing state sales taxes were intended to be small enough that people would not be discouraged from buying sugary drinks.

ML: A number of people I’ve asked about this tax have predicted that people won’t notice or care, and that their habits will go unchanged. Is 24-cents-a-can enough to make a difference?

DW: That’s the beauty of this proposal—even if some people continue to buy their sugary drinks, public health will improve. Through nutrition education and free cooking classes, better food in schools and in low-income communities, more fresh drinking water fountains and water bottle filling stations, and more opportunities to be active and fit, all paid for by the soda tax revenue, all SF residents will benefit even if the tax does not significantly reduce consumption immediately.

But it is clear that the beverage industry doesn’t believe that “people won’t notice or care, and that their habits will go unchanged.”

From the millions that Big Soda has plowed into defeating soda taxes elsewhere, it is readily apparent that the beverage industry is scared to death that these measures will, indeed, affect consumption of their profitable products; that’s why they are so desperate to keep them from passing, and willing to spend however many millions it might require to ensure that.

ML: Has your research led you to any examples of soda taxes that have effectively reduced consumption (whether or not that was their intention)?

DW: Look no farther than Mexico, where a soda tax was implemented in Januray 2014.

According to The Wall Street Journal, right after the soda tax was implemented, “Soda volume in Mexico, Coke’s second-largest market, have fallen an estimated 5 percent or more since the country introduced a tax on sugary beverages in January.” Now, consumption there is down 10 percent.

ML: The tax is often referred to as regressive because the cost would be more significant to a low-income person than a high-income person. What’s your perspective on this claim?

DW: Know what else hits low-income people harder? Life.

Virtually every expense—from housing and food to transportation and healthcare—hits low-income people harder than wealthier folks, and takes a larger percentage of a poor person’s income than a middle-class or rich person’s income.

Know what else hits low-income people harder? Poor health.

The World Heart Federation says, “Being poor, no matter where in the globe, increases your risk of heart disease and stroke.” A 2011 study done at UC Davis found that “people with lower socioeconomic status had a 50 percent increased risk of developing heart disease compared to other study participants.”

Meanwhile, it is low-income communities who will benefit most from the money raised by the SF soda tax, 40 percent of which is mandated to pay for health improvements in public schools; more than 60 percent of SFUSD students are from families with income so low that they qualify for free or reduced-price school meals. For a tax that Big Soda calls “regressive,” the SF soda tax will yield some pretty progressive benefits.

ML: Many of those who oppose the tax would prefer an educational effort rather than an additional tax to address the problem. Is taxation of sugary drinks the most effective approach or otherwise necessary to combat childhood obesity?

DW: And how do those who would prefer an “educational effort” rather than a tax expect to pay for that effort?

The SF soda tax is estimated to generate as much as $54 million annually, much of which will go to fund nutrition education in schools and communities all across the city, as well as cooking classes to help families learn to shop for, prepare and serve healthy meals. Education is indeed a vital part of the effort to reduce the negative impact of sugary beverage consumption on public health, but education is not free, and, all by itself, it is not enough to bring about the needed change. Revenue from the SF soda tax will pay for a myriad of public health improvements, including education, all designed to work together to support a healthier San Francisco.

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10 Comments

  1. BuildMore4Affordability

    tax that crap

  2. Tyler

    Didn’t the soda industries’ lobbyists just get the label warnings on soda drinks shot down recently in California?

    I’m proud that our city is on its way to defeating corporate interests in favor of supporting public health.

  3. Nandro

    Thanks for providing these interview. I’ve obviously gotten the 100 or so mailers form the anti-tax crowd but it was useful to hear the perspective from a local small business owner.

  4. Roberto Ariel Vargas

    “It’s not healthy to drink a bunch of soda and that’s an education campaign that needs to start at home. That includes exercise and better eating habits all around. We think it’s something that parents should be responsible for, not businesses paying a tax to get education.”

    As a parent, I can tell you that we can’t control everything our child is exposed to, or can buy just about anywhere. And the Soda industry spends billions every year marketing this stuff– from free games for their smartphones to high-paid celebrities selling it. It’s not fair to say parents should be the only ones responsible for keeping kids from drinking this stuff, especially when ALL OUR tax dollars pay for the heavy cost of healthcare for a nation now 40-50% diabetic, according to the Centers for Disease Control.

    Whether it’s been seat belt laws, tobacco taxes, or helmet laws, we have ALWAYS needed regulations to protect the public health. Education alone has never worked. We need education AND regulations to get people to use toxic products less, or to practice unhealthy behaviors less.

  5. JCordeiro

    Many bars and restaurants offer free refills of soda. If they changed this practice–which is especially harmful to public health– they could easily compensate for the increased costs from the distributors due to the soda tax. Even if they just offered 1 free refill instead of endless refills, this could help businesses.

  6. JCordeiro

    Also, wanted to correct an error in the article– Norman Yee has now officially endorsed Measure E (soda tax). He voted no to place on the ballot but is now endorsing the effort.

  7. Sam

    I usually oppose new taxes but this one is effectively a voluntary tax because it is easy to avoid paying it.

    It’s essentially a tax on stupidity.

  8. Mark

    What we really need is to ban the use of foods stamps for sweetened drinks along with a lot of other crappy processed foods. While I avoid most of these drinks my taxes end up buying these drinks for low income people. I often see families purchasing sodas, other sweetened beverages and lots of junk food at our local Safeway on Mission St with Food Stamps. Will this tax discourage them if they are using the Food Stamps? Tragically even the kids of these families using the benefit are already obese and are likely to develop diabetes and other diseases. Then our taxes will have to pay for the associated health care costs to treat preventable diseases. Mayor Bloomberg in NY tried to end this obscene subsidy to the sugar industry but failed. Hopefully our Supervisors and State legislators will step up and ban this taxpayer subsidy to the sugar industry.

    https://med.stanford.edu/news/all-news/2014/06/forbidding-use-of-food-stamps-for-sweetened-drinks-could-reduce-obesity-diabetes.html

    • Andrew C

      The last thing poor people need is more people infantilizing them by suggesting that their behavior should be more regulated than others’. Regulations like that create bureaucracy as well as anti-poor stigma, and reinforce the idea that poor people are stupid and need to be told what to do.

      As long as your making the “my tax dollars” argument, why give poor people any choice at all? I mean, as long as they’re taking our money, maybe they should only eat the most healthy, nutritious food. Maybe they should be forced to exercise, prohibited from smoking, compelled to wash their hands with especial rigor.

      Giving someone a paltry handout does not justify acting like you’re their parents.

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