As we debate whether to put a soda tax before the voters in Davis, there seems to be a lot of speculation without a lot of analytical ground for that speculation. One of the key questions is why Berkeley’s tax was able to pass at 76 percent while soda taxes in 30 other cities and states have failed. For one thing, because it was a general tax, it needed just a simple majority. That means the money cannot be specified for a specific purpose.
However, it passed with enough support for a two-thirds threshold. San Francisco’s measure, on the other hand, actually received a majority of votes at 55 percent, but that was well short of the two-thirds needed because it specifically directed revenue to physical education and nutrition programs for kids.
The San Francisco Chronicle analyzed this issue in November of 2014. Corey Cook, a political science professor at the University of San Francisco, ran a precinct by precinct analysis of how residents voted and found, “If all of San Francisco voted along the lines of the Castro, Haight, Potrero Hill and, yes, Noe Valley, the soda tax would have won. But neighborhoods with more low-income and minority voters, including Chinatown, Bayview-Hunters Point and Visitacion Valley, voted against the tax.”
Ironically, those are the areas that most needed the revenue for the nutrition and other programs.
There is also the fact that the American Beverage Association poured a whopping $9.1 million into defeating the measure and they concentrated their spending in low-income, minority neighborhoods.
Berkeley is smaller, whiter and wealthier than San Francisco and probably behaved more like Noe Valley and like rest of the neighborhoods in San Francisco that voted for the tax, the San Francisco Chronicle speculates.
Georgetown University Professor Lawrence Gostin, who specializes in public health law and supports soda taxes, told the Chronicle that “the strategy is common because low-income people drink more soda and cannot easily afford the extra taxes. To win them over, soda tax proponents must work closely with churches, health advocates and community leaders in those neighborhoods.”
“We need to consult them, engage them and have the voice come from them,” he said. “They need to say, ‘We won’t stand for this for our children.’”
If that analysis holds, it bodes well for a similar measure passing in Davis.
A big question is whether the soda tax, which will target distribution, has any effect on soda retail prices. Given how recently the tax has been implemented, the findings are very mixed.
A huge team of researchers presented interim results November 3, 2015, at the American Public Health Association. They find that “the one cent per ounce tax has been fully passed on to the retail pricing of sugar sweetened beverages in large and small chain supermarkets and chain gas stations, a prerequisite for taxes to reduce consumption.”
Data from the City of Berkeley, they report, “also show that over $692,000 in revenues were raised in the first six months (or over a dollar for every resident per month), to be used in general fund efforts to promote healthier communities in the City.”
The preliminary results are based on data from two studies, one which collected prices from 26 stores pre-tax and again at four months, and the second, analyzing sales, weighed data on 9.1 million beverage transactions in two grocery chains during the first six months.
The researchers found, “Price changes varied by store and product type as well as by package size. Findings were consistent across studies and with a recently published smaller study.”
A similar 10 percent beverage tax in Mexico has been shown to decrease consumption of sugar-sweetened beverages.
Another team of researchers, looking just three months after the implementation of the tax, found a different result. “Higher Retail Prices of Sugar-Sweetened Beverages 3 Months After Implementation of an Excise Tax in Berkeley, California” by Jennifer Falbe, Nadia Rojas, and Kristine A. Madsen with the School of Public Health, University of California, Berkeley and Anna H. Grummon with the Gillings School of Global Public Health, University of North Carolina, Chapel Hill, published their account in the American Journal of Public Health.
They find, “Approximately 3 months after the tax was implemented, SSB retail prices increased more in Berkeley than in nearby cities, marking a step in the causal pathway between the tax and reduced SSB consumption.”
However, a third study, a working paper by economists John Cawley of Cornell University and David Frisvold of the University of Iowa for the National Bureau of Economic Research, that was published this August, attempted to “estimate the pass-through of the first city-level tax on SSBs in the U.S., which was enacted by the voters of Berkeley, California in November, 2014.”
They find, “Estimates from difference-in-differences and other models consistently indicate that there was relatively little pass through of the Berkeley SSB tax to consumers; across brands and sizes, we estimate that retail prices rose by less than half of the amount of the tax. This is in contrast to much of the previous literature on the pass-through of taxes, which tended to find full or even overshifting of taxes.”
What does all of this mean? For one thing, attempting to ascertain the impact of a tax less than a year after the voters pass it is probably not the most fruitful analysis.
However, the voter analysis in San Francisco suggests strategies for cities to combat the rhetoric of the beverage industry, and also provides some evidence that a soda tax may be successful in Davis.
—David M. Greenwald reporting