Will Council Put a Soda Tax on the Ballot?

Soda Tax

Soda Tax

The Davis City Council this evening will be considering a number of potential revenue measures. While most of those will be aimed toward developing a revenue stream to pay for ongoing city services and upgrading infrastructure, the soda tax figures to be a bit different.

At the December 1 meeting, the city council requested that the revenue discussion include the possibility of a sugar-sweetened beverage, or soda, tax, similar to what Berkeley passed with a 75 percent acceptance rate in November of 2014.

In Berkeley, each ounce of a sugar-sweetened beverage is taxed one cent. Staff notes, “The tax there is anticipated to generate $1.2 million in its first year, although there is not yet a full year’s worth of data. The first quarter, however, generated $375,000.”

For Davis, staff estimates that a similar tax would generate between $800,000 to $1,000,000. The City Attorney has looked into whether Davis, a General Law city, is eligible to implement a soda tax and has determined the city is legally able to pursue this type of tax.

Staff notes that, to date, “No community outreach or further research has been undertaken at this stage by city staff related to a potential soda tax, although the process to bring this type of tax to the ballot is the same as any general or special tax.”

Last week, the Vanguard met with Harold Goldstein, executive director of the California Center for Public Health Advocacy, based in Davis, who said that, while Berkeley is so far the only city to have enacted a soda tax, “others are coming.”

 “There is no question,” he said.  “In some ways it’s like the anti-tobacco movement.  California was first, but now almost every state has a tobacco tax.”

Any beverage with added sugar is eligible. That means not just soda, but energy drinks like Gatorade, fruit juices with added sugar, and iced teas with added sugar. Excluded would be diet sodas, but not low-sugar Gatorade.

Dr. Goldstein noted it is stunning just how much sugar people are drinking. He said that the biggest creative accomplishment for the beverage industry was the development of those self-serve twelve packs. “They get real estate in your refrigerator,” Dr. Goldstein noted.

Studies have looked at how much of the obesity epidemic is caused just by soda. A study between 1977 and 2001 looked into the issue and found that, in 2001, people on average were consuming 278 calories more per day than they were in 1977.

That doesn’t sound like a whole lot, but it is. It is estimated that, for every 3500 extra calories, a person gains one pound. At 278 extra calories a day, that means that, every two weeks or so, people are gaining one additional pound. Over the course of a year, that means the typical person could be adding up to 25 to 30 pounds.

Dr. Goldstein noted that the perception that people have to dramatically overeat to gain a lot of weight is false. Moreover, of those 278 calories, about 43 percent is coming from the consumption of beverages.

One soda a day increases the risk of obesity by 50 percent and increases the risk of getting diabetes by 30 percent. Twenty-five percent of teens in California are diagnosed with diabetes or pre-diabetes.

How attributable are these factors to sodas? Dr. Goldstein believes that the research shows that sweetened beverages are responsibility for half of the problem and that we need to start addressing this epidemic by starting with the biggest culprit first.

He noted that diabetes is now the leading cause of increased health care costs.

The way that a soda tax would work is that they would tax it directly on the distributors. Dr. Goldstein said they have found there are only five or six distributors and that this tax is extremely easy to administer, with only about two percent of proceeds going to administration.

The distributors are the ones that are taxed, and then the vendors decide what to do. Early on, he said, it looks like they “eat” the tax themselves, but over time they pass more and more down to the consumers – which is where the proponents want it to go, because they believe that the evidence shows that, with increased costs, consumption goes down.

In Berkeley they established an expert panel and the initiative defined who would be on the expert panel.

In Davis, there is a simpler approach, which would utilize the Social Services and Parks and Recreation Commissions. They would be given the power to advise how to use the money.  Dr. Goldstein believes this would solve the problem of the advisory.

The money would go to a lot of children’s programs, which in tough budget times have shrunk or gone away altogether.

He said, “It makes a lot of sense to tax a product that has a lot of detriment and no benefit and help to fix the problem it’s causing.”

However, he warned there will be considerable pushback, as the beverage industry is a multi-billion dollar industry. CalBev is already here he warned, based on two paragraphs in the Enterprise. Dr. Goldstein expects them to spend $2 million against the soda tax in Davis.

The pushback is already coming. In today’s local paper, Kevin Wan, owner of Sophia’s, has an op-ed arguing against the proposed tax.

He writes, “Proponents say the funds would be used to ‘educate’ Davisites about the ‘perils’ of these beverages. Really? What kind of educational program would that be, exactly? Is there any actual plan for where this money is going?”

He continues, “If Davis voters follow in Berkeley’s footsteps, we’d become only the second city in the nation to burden small businesses with a tax on hundreds of sweetened beverages. Lucky for us, Berkeley has provided a pretty clear picture of what a ‘soda tax’ on iced teas, coffee drinks, energy drinks, juices and soft drinks really looks like. Voters should know it’s hardly a success.

“And while proponents are suggesting that Davis could raise nearly $1.5 million annually from the tax, the citizens of Davis should know that’s a gross overstatement. Berkeley isn’t even projected to collect that much and Davis has half the population,” he said. “A penny per ounce doesn’t sound like a lot, but that amount instantly raises the cost of some products by 50 to 100 percent.”

He argues, “Whatever the outcome, Davis businesses and residents pay the price. The Davis City Council has set a goal to ‘undertake actions to recruit and retain businesses.’ Taxes that single out retailers for selling products consumers want are neither attractive to new businesses nor sustainable for existing ones.”

Mr. Wan concludes, “If the Davis general fund is in need of money, or if the council members have projects that need funding, let’s have a genuine conversation about sustainable and reliable revenue streams. But let’s be honest about what these funds are really intended for and not ignore the problems such a tax creates.”

But, as Mr. Goldstein would argue, this isn’t really about general fund money, this is about addressing a health epidemic. He simply sees this as a mechanism to begin to address the big business that is the soda industry.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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63 Comments

  1. Tia Will

    Whatever the outcome, Davis businesses and residents pay the price”

    Mr. Wan is absolutely correct in this statement. Davis businesses and residents will either pay the price now in terms of a small tax on a substance with no nutritional value and huge downside health risks, or they will pay the much higher price associated with Type II diabetes in terms of lost productivity in school and the work place, and all of the enormous health care costs of advancing diabetes with its end organ destruction. We can pay a little now, or a lot later. This proposal is not a panacea, but it is a small step in the right direction. And small steps in the aggregate, can have major impacts on the well being of both the individual and the community.

  2. Tia Will

    BP

    I really appreciate your addressing this issue and linking this article.

    Your are raising a question that I have also wondered about a great deal. But I think the key to how we should proceed at this point in time lies in one statement from the article you cited :

    Still unclear is whether it’s healthier to swap sugar for sugar substitutes.”

    While the impact of sugar substitutes is unclear, the adverse impact sugary beverages is absolutely clear. I do not believe that we should delay action hoping to limit a well known deleterious substance on speculation about how that may ( or may not ) affect the consumption of other substances whose adverse consequences ( if any) are not as well demonstrated.

      1. Tia Will

        BP

        Yes, because that one sentence holds the key. There is a vast difference between the known, and speculation about what might be the case. You and others have frequently noted, accurately, that science is not fixed but subject to change as more information is obtained. That does not mean that we do not act on what we know to be true, but also that we do not jump the gun and over react to what is not known.

        1. Barack Palin

          Tia Will 
          December 16, 2014 at 7:31 pm

          BP
          There is some evidence that I cannot reference this evening, but can find if someone is truly interested that switching to artificial sweeteners has its own set of problems in promoting more craving for sweets and thus is not a good substitute for sugary beverages.  If anyone is really interested, I can provide the data later. Just let me know.

  3. Tia Will

    BP

    I’ll tell you what, make it 5 cents an ounce and designate the funds to be used only for roads and I’m onboard.”

    The first Vanguard induced smile of the day award goes to you !

    How about a compromise. 5 cents an ounce with the proceeds going to child health and wellness programs or the currently existing parks and pools for exercise and wellness promotion ?

     

  4. Frankly

    Stop the madness.  Taxes should not be used to force unwanted behavior.  And no new taxes should be added to pay for government services that are already funded, but that politicians have spent giving fat pay and benefits to union members for their votes.

    Finally, what is the moral argument for funding essential city services extracting money from people unable to control their sugar intake?

    1. Davis Progressive

      seems like taking a chunk out of the sugar industry is a good step toward slowing the growth of child obesity and diabetes?  no.  how is this different than a cigarette tax?  or an alcohol tax?

      1. Frankly

        Well I also oppose the cigarette tax (for example, it killed Eric Gardner).

        But it is different in that sodas are not regulated as a drug.

        Alcohol tax is a completely different animal.

        1. Davis Progressive

          that’s really a distinction without a difference.  the main problem here is that there are health impacts of the consumption of sugar just as there are about the use of cigarettes.  there are enormous health care costs and there is a need for a public health campaign.

          you guys were joking about fatty-pants, but this isn’t fat shaming, it’s really about teaching kids and adults healthy eating habits regardless of their weight.

        2. Frankly

          it’s really about teaching kids and adults healthy eating habits regardless of their weight.

          Teaching?  Give me a break.

          So is income tax teaching me to work less?

          Sales tax is teaching me to buy less?

        3. hpierce

          The BMI tax, I’d FULLY support, with exemptions for those whose genetics (known several) are obese thru no fault of their own, despite their efforts to avoid “sugary drinks”, etc.  We could use the tax to support Tia’s recommended causes.  I’d definitely support that!

        4. Frankly

          A soda tax does not teach you to drink less soda it only results in less discretionary cash left over to buy other things… like healthy food.

          The people that I know that want to drink soda are going to drink soda.  You would need to price it like a luxury item before the cost would be a factor to dissuade consumption.

          Even then some entrepreneur would come up with the home soda-making machine that would suddenly be marketable given the high price of store-bought soda.

  5. Napoleon Pig IV

    Davis politicians just don’t have the spine to go far enough. Clearly, the tax should be closer to a dollar than a penny, and equivalent taxes should be levied on all foods other than rice and beans – and even on rice and beans if, horror of horrors, they are GMO rice and beans.

    While they’re at it, they should tax all clothing that isn’t handmade of natural fibers, all books that are not on the official recommended reading list, all televisions, WiFi devices, and assorted handhelds that are not fitted with a state approved chip that blocks all non-educational programming and unapproved information flow.

    If our politicians only had appropriately-sized personal anatomy, our revenue problems would be over, and we would all be safe, sound, and appropriately compliant. Oink!

    1. Barack Palin

      You’re on to something here Pig.  Our local liberal nannies should have an ordinance that fits all Davis TV’s with a meter so that anyone who watches Fox News or any other Fox programming should be hit with a $1/hour tax.

      1. Barack Palin

        This taxing vices is a great idea.  Let’s get together and tax anything that our liberal politicians decide is bad for you.  If we tax enough bad habits we can fund the entire city and do away with parcel and DJUSD school taxes.  Think about it, roads, pools, police, firemen, you name it, it can be paid for with other’s transgressions.

      1. Napoleon Pig IV

        While we’re at it, let’s be sure to tax ignorance. And anger, pride, sloth, lust — now there’s a revenue bonanza for you, lust. Let’s tax that and we can all live in luxury at the behest of the State.

  6. Tia Will

    Frankly, are we talking fat people bigotry?”

    Frankly, no. I understand that you two are having fun pretending that this is about how people look, or their BMI. But all you are really doing is exposing your lack of understanding of the issue. This is not about appearances, it is about a metabolic disorder. It happens that Type II diabetes is more common in those who are obese, but it exists in those who are not as well. I am a pre diabetic ( now controlled) and my BMI is 22. Many of my patients have the same habitus and the same metabolic abnormality.

    You’ll have to excuse me, but for me this is not a laughing matter. A metabolic disorder that blinds, causes kidney failure, results in increased risk of stroke, amputation, and heart attacks is a serious issue. It is fine to disagree about what steps might be effective. I am not ok with ridiculing these steps at prevention or distorting the issue.

     

        1. Frankly

          The total fed and state tax on cigarettes in CA is almost $2 per pack.  The average retail price of a pack of cigarettes in CA is about $6.   So you are talking about 33% of the cost being tax.

          And yes, this has an impact on the number of smokers because the taxes have priced it out of the budgets of some people.   But then some people still pay that high price even though they cannot afford it and cut out other things like health food for them and their families.

          We are not talking about a tax that is 33% of the cost of soda.

          There are two ACTUAL justifications for this soda tax.  One is stupid— that it will help reduce the occurrence of obesity and/or diabetes.  The other is a lie—that is is for health benefits of the public when it is clearly just an opportunity for tax and spend people to loot more from those that earn it to give it to those that don’t.

          1. Don Shor

            We know there is some price point at which consumers would change their behavior. But a penny an ounce isn’t it. This is just low-hanging fruit of revenue to fund special projects.

  7. Matt Williams

    Something that has been (as best as I can tell) missing from this dialogue is the real fiscal cost incurred by each and every person in America who purchases health insurance.  When a health insure sets its annual premiums, it:

    (1) analyzes the clinical/medical risk of their insured population,

    (2) calculates the fiscal cost of treating/addressing that clinical/medical risk, and

    (3) sets its annual premiums at a level to cover the fiscal cost of treating/addressing that clinical/medical risk.

    Increased levels of diabetes means increased clinical/medical risk, which means increased clinical/medical treatment costs, which means increased healthcare insurance premiums for everyone.

    The WIFM associated with reducing the incidence level of diabetes is lower insurance premiums for everyone … more money in everyone’s pocket.

    Follow the money.

    1. Napoleon Pig IV

      Matt

      What you say about diabetes and health insurance makes sense. But, do you really believe the politicians give a hoot about that or believe their tax is going to have an impact on such things?

      I don’t. I think it’s just a money grab – just a typical politician/porker-led money grab in which they go after an unpopular target (sugar, in this case) in the hope that they can enrich their coffers without riling the sheep.

       

      1. Matt Williams

        I understand your point Napoleon.  My concern with your point is that it is focused on the question, “Why is this being considered?”  I would much rather see the focus be on the question, “How do we achieve an outcome that provides the greatest good for our community?”

        If we achieve that greatest good (whatever it may be), then why the politicians are doing what they are doing and/or whether they give a hoot. The value of solid evidence-based decisions trump the appearances associated with political calculations.

        1. Matt Williams

          If we achieve that greatest good (whatever it may be), then why the politicians are doing what they are doing and/or whether they give a hoot is irrelevant.

           

           

        2. Napoleon Pig IV

          Very good observation – and I agree that it is a good thing when politicians achieve a good outcome even if unintended. It’s sort of like that blind squirrel thing.

          However, what difference can one cent possibly make? I don’t think the politicians are motivated by doing good in this case. I think they are just going for the money and have calculated that they can skim one or two cents and get away with it. If they really wanted to influence public health, it would take a disincentive to purchase greater than one cent per drink to influence behavior in a measurable way.

          So, I’m in complete agreement with you on the important issues and even on re-framing the questions with a focus on desirable outcomes, but I’m probably a lot more cynical than you are about the qualities and motivations (and ultimately value) of our political class.

      2. Tia Will

        Napoleon Pig IV

        I think it’s just a money grab – just a typical politician/porker-led money grab in which they go after an unpopular target (sugar, in this case) in the hope that they can enrich their coffers”

        I take exception to your premise here. If the amount of money being assessed is as Frankly suggests, “negligible”, then surely it is “negligible” to the politicians as well. One would think that if they were truly engaged in a “money grab” they would be seeking as high a tax as possible. But even more basic than that is your use of the words “enrich their coffers”.  I doubt that Mayor Wolk will be placing these funds in “his coffers” for a sports car of his choice. “Their coffers” are actually “our coffers” and will be spent on projects of benefit to the community. Now you may say that you don’t want or appreciate any given “benefit” but perhaps your personal preferences, like mine, and not representative of “the community”. That is why we vote after all, to choose which citizens are going to represent us.

        Finally with regard to the “political class”. Do you consider Robb Davis a member of “the political class” ?  How about Brett Lee ?  I am a very strong proponent of this tax. Am I a member of your “political class” ? I’d say that is a pretty broad brush that you are painting with. 

        1. Barack Palin

          A penny here, a penny there all of a sudden adds up to $1 million dollars (the projected take of loot) taken out of our local economy by the money grubbers because they think they know how to spend your money best.

          Only one other city in the nation has this stupid tax.  Why must we feel we need to go down this road too?  Do we not want to be outdone by Bezerkely?  Kudos to whacko S.F., at least they weren’t cuckoo enough to vote for a soda tax.

    2. Barack Palin

      Please Matt, there’s a million things that can healthcare insurance to go up.  Obamacare obviously is one of them.

      What we have here is people looking for reasons to justify a soda tax.

      Any sitting CC member or any candidates for CC will never get my vote if they condone these types of taxes.

      1. Tia Will

        BP

        Please Matt, there’s a million things that can healthcare insurance to go up”

        So we should ignore one contributing factor because there are many others as well ? By that reasoning, we should not treat diabetes at all since the person may get cancer anyway.

  8. Jim Frame

    I just got off the phone with a pollster on this matter.  They’re testing various arguments pro and con, along with things like the favorability rating of Dan Wolk, trust in the Davis City Council, and a 1-cent versus 2-cent tax.

  9. Frankly

    By the way, if you choose San Diego or Huston as connecting flight hubs, expect to be smushed by the very big people that will board with you.  I don’t think it is soda that is the only thing contributing to that situation, but I could be wrong.  And I don’t know if those big folk have a higher incidence of diabetes, but I would guess so.

  10. Tia Will

    Frankly

    I don’t think it is soda that is the only thing contributing to that situation, but I could be wrong. “

    You are correct that soda is not the only factor. However, there have been several posts explaining why soda is the target. The sweetened beverages allow delivery of a much larger volume of sugar to the pancreas in a much shorter period of time thus overwhelming its ability to compensate. People are simply unable to consume this quantity of sugar, sans other nutrients, in the same amount of time with the other “goodies” which have high sugar content.

    As for the argument that one cent will not make any difference. Perhaps not to you and your acquaintances, but if it does give any one pause or cause them to drink less it will be of benefit. I doubt that you know how “everyone” will respond. Personally, I would prefer a much higher tax, but I do not for one moment believe that you would support that either.

    And like Matt, I do not care about any given politicians motivation. I do care about the health of our community and I know from my own personal experience that even a very small change ( giving up one coke daily) can make a large difference for the individual ( 10 lbs in my case !) and improvement in my blood sugar numbers.

    1. Barack Palin

      Well thanks mom.  I’m glad the city and our local busy bodies have all of our best interests at heart when they go around and decide what else needs to be taxed because they know what’s good for everyone.

  11. Tia Will

    Frankly

    A soda tax does not teach you to drink less soda it only results in less discretionary cash left over to buy other things… like healthy food.”

    First can we at least agree that we do not know how a soda tax will affect the buying patterns of people who live in Davis ? You believe that it will make no difference. I am not so sure. But we don’t know as a matter of fact. So let’s suppose for the moment that you are wrong. Let’s suppose that one individual decides to drink one less bottle of coke per day. At $1.15 less per day ( as purchased at the Co-Op for purposes of presentation, not for consumption) that would amount to $419 in increased discretionary spending in one year that could be used for “other things….like healthy food”. That is not a trivial amount of healthy food in my opinion.

    1. hpierce

      C’mon… Costco soda sales will spike… Davis stores’ soda sales will decline proportionally.  Consumption will very likely remain unchanged.

      Funny thing… at fast food establishments, they only price ‘drinks’….  you pay the same for soda or iced tea.  So, it is reasonable to assume that those establishments will up the price of all those drinks.  The fast food folk will reap a profit for those drinking iced tea (if we can even measure soda sales).

      So, we will have a tax on sugar, and tea.  Deja vue all over again?  Are stamps next?

      1. Barack Palin

        Good point, non sugar sweetened drinks will be dragged into the mix unless of course these restaurants go to filling the drinks from behind the counter and get rid of their beverage machines which will in turn cost them more in manpower.

      2. Tia Will

        hpierce

        C’mon… Costco soda sales will spike… Davis stores’ soda sales will decline proportionally.  Consumption will very likely remain unchanged.”

        Maybe… or maybe not. That we do not yet know. I suspect it will vary by population group. This may well apply to many households. But I doubt that many of our carless college kids will be traveling up to Costco on their bikes to save on soda costs ( just an example, don’t get all excited). Or for those of us who never go out of town to shop, it certainly will not have that effect.

        1. Barack Palin

          But I doubt that many of our carless college kids will be traveling up to Costco on their bikes to save on soda costs 

          Awwww, captive tax payers who have no choice but to pay the tax.   Most college students have very little extra income just to be held captive to soda taxes.

        2. hpierce

          More ‘college kids’ have cars now (big time) than in the’70’s… didn’t have a car until I graduated college and had a ‘firm job’.  By the time you are in college, most of your habits, particularly related to ‘food’, are pretty much established… the number of obese people (% -wise) are similarly ‘established’, by the time they enter college.  Your arguments not getting much traction with me.  And I have maybe one soda a year.  7-up (and A&W root beer) were the only ones I ever liked.  I actually don’t give a damn about the proposed tax itself.  I won’t be paying it.  But lame arguments ‘punch my buttons’.

  12. Barack Palin

     At $1.15 less per day ( as purchased at the Co-Op for purposes of presentation, not for consumption) that would amount to $419 in increased discretionary spending in one year that could be used for “other things….like healthy food”. 

    Or maybe they buy more cookies, ice cream and beer?

    Funny how you frame it that they will all of a sudden change their food habits and buy healthy food simply because one of the items they liked is getting taxed.

    1. Tia Will

      BP

      Funny how you frame it that they will all of a sudden change their food habits and buy healthy food simply because one of the items they liked is getting taxed.”

      Please note that was not how I framed it. I was responding directly to Frankly’s assertion that they would have less discretionary spending money. That is only true if they continue to buy the soda. Discretionary is discretionary and they could certainly spend that $419 on anything they like. Or they could save it. Or they could invest it. Or…. the whole point is that it would be theirs choose, they are not being robbed of it.

      1. Barack Palin

        the whole point is that it would be theirs choose, they are not being robbed of it.

        No, the point is they do get robbed everytime they buy a sugary drink.

  13. zaqzaq

    They should use the tax revenue to fund the needed sports facilities which would provide our residents with greater opportunities to exercise.  New soccer fields, little league fields and a 50 meter pool are all items that will improve the health of Davis residents.  I fail to see how a city lead education initiative will be effective.

    1. Barack Palin

      That’s what I say, if they’re going to institute this stupid feel good tax at least use it for our roads and infrastructure or as you say for sporting facilities.

  14. Tia Will

    BP

    adds up to $1 million dollars (the projected take of loot) taken out of our local economy”

    You forgot about the part where it goes back into the local economy by being spent on local projects. Do you believe that this money is going directly into the pockets of the CC.

  15. Tia Will

    zaqzaq

    They should use the tax revenue to fund the needed sports facilities”

    That would be a great choice. As would be using it for greenbelt, and bike path improvements.  Money spent on these aspects of our infrastructure would be that much money available for BP’s favorites, our roads.

    I would also like to point out that “education” can have very broad meaning. One could say that every public announcement is “educational” as it raises people’s awareness. So are billboards such as the annual antismoking school competition which costs very little, but raises children’s awareness as they submit their entries hoping that theirs will be chosen to be placed near the freeways.

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