Two California Towns Weigh Soft Drink Taxes

WASHINGTON, D.C. -- The Nov. 6 election ballots in two California cities will contain more than just the names of the presidential candidates. Voters in Richmond and El Monte, Calif., will pull levers for or against measures that would impose taxes on soft drinks.

Measure N in Richmond  would impose a "business license fee" of 1 cent per ounce on soda retailers, while El Monte voters will consider Measure H, which imposes a "sugary sweetened beverage license fee" of the same amount. Both towns have corresponding ballot measures that specify how the resulting revenue would be spent.

"Whatever public health problems we may face from an overweight population, imposing new excise taxes is unlikely to be the solution," said Scott Drenkard, economist with the Tax Foundation, a non-partisan research organization. "Singling out one specific category of products doesn't address the complex health problems associated with obesity, while levying a tax on the entire population doesn't focus on the individuals for whom the policy was implemented in the first place."

According to the Tax Foundation, 33 states currently treat soda differently than groceries for tax purposes, while four states have special excise taxes on soda. Those states are Arkansas, Tennessee, Virginia and West Virginia. The proposals in Richmond and El Monte, however, would be the largest taxes on soda in any U.S. city. The penny-per-ounce levy would add $2.88 to the price of a 24-pack case of soda.

Research on taxes targeting ostensibly unhealthy food choices has found that the economic impact on low-income families can be twice as high as that on high-income households, while a blanket tax on soda sales will likely have an unevenly burdensome impact on poor, non-white, and non-college educated consumers, the Tax Foundation said.

Even when consumers do reduce their soda consumption to avoid the tax, the policy might still not be accomplishing its goal. "While public health advocates claim that soda taxes are a useful tool to combat obesity, economic evidence shows that they have minimal effects because consumers are likely to substitute other calorie-laden products for soda," Drenkard said. "As the economic and behavioral research suggests, the tax code is far too blunt an instrument to address such an important public health issue."