November 25, 2014

Why the Berkeley Soda Tax Has Got No Fizz

Sherzod Abdukadirov

Former Research Fellow
Summary

Just in time for Thanksgiving – the holiday season when most American put on a few pounds – citizens of Berkeley, California approved a ballot measure that would impose a one-cent tax on each ounce of soda. Their goal is to counter the trend of increasing obesity, which advocates of the tax blame largely on soda and other sugar-sweetened drinks.

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Just in time for Thanksgiving – the holiday season when most American put on a few pounds – citizens of Berkeley, California approved a ballot measure that would impose a one-cent tax on each ounce of soda. Their goal is to counter the trend of increasing obesity, which advocates of the tax blame largely on soda and other sugar-sweetened drinks. But while the city’s goal to improve the health of its citizens is laudable, its policy is misguided and may in fact cause more damage than good.

The biggest problem is that advocates treat the tax as a twofer. They argue that the tax would both decrease soda consumption and raise revenue, which could then be used for health programs. However, if the tax raises substantial revenues, it would in fact be a failure. The measure’s ultimate goal should be to ensure that no one actually pays the soda tax but switches to healthier non-taxed options instead. Note that the city imposed the tax on soda distributors since Berkeley does not have the authority to pass a sales tax directly. But the measure’s advocates hoped that the distributors would pass the tax on to consumers, making it effectively a sales tax.

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