Berkeley Soda Tax

Summary

The Berkeley Soda Tax was passed in November 2014, despite a $2.4 million campaign in opposition from the American Beverage Association (compared to far fewer resources spent in Berkeley on behalf of the soda tax). Organizing efforts were led by a grassroots coalition of parents, teachers, healthcare professionals, and community leaders seeking to reduce the prevalence of obesity and type 2 diabetes. The grassroots campaign succeeded, in part, by discrediting the soda industry by displaying parallels in their tactics to the tobacco industry^.[1] The penny-per-ounce tax is paid by distributors of sugar-sweetened beverages (SSBs), including soda, juice with added sugar, energy drinks, and coffee syrups. As of March 2016, the tax has generated $1.5 million that will be allocated to community nutrition and health efforts. The soda tax has had measurable impacts. A recent study published by the American Journal of Public Health showed a 21% drop in consumption of SSBs in the tax’s first year. Berkeley residents also reported a 63% increase in drinking bottled or tap water. By contrast, there was a 4% increase in consumption of SSBs in Oakland and San Francisco—where a soda-tax initiative was defeated last year—and only a 19% rise in water consumption. These encouraging outcomes may have been helpful in pushing more cities toward adopting this measure; soda taxes passed in six more cities and counties 2016, including 4 by popular vote (Boulder, CO, and San Francisco, Oakland, and Albany, CA) and two by local governments (Philadelphia and Cook County, IL).

Keys to Success

Highly visible

The Berkeley Soda Tax came about through a major public campaign and was passed in Berkeley by a 75% popular vote.^[2] The grassroots nature of the Berkeley tax and the public campaign that led to its implementation meant that the tax assumed a dual role in changing behavior. It raised awareness in addition to prices.

Local, grassroots engagement

The campaign to implement a soda tax in Berkeley was community-led from the beginning, organized by the Berkeley Healthy Child Coalition, which comprised local stakeholders and residents. Sara Soka, a campaign manager for the Berkeley tax effort, noted that the coalition consistently, “shared decision-making power, and understood the importance of early and consistent outreach to community leaders.” As a result, the “Berkeley” in “Berkeley vs. Big Soda” truly did reflect the community and its goals.^[3]

Salient impact on decision-making

While Berkeley is often touted as the first city to implement a soda tax, many cities and states had already been leveraging sales taxes on SSBs prior to the Berkeley vote. What makes Berkeley unique is that the tax is reflected in the shelf price, rather than being added upon purchase. This means that consumers see the increased price before they make a decision, and the price increase is tied directly to the product, rather than being hidden in a sum of all the sales tax paid on a purchase.^[4] By making the tax more visible, it functions as a more salient factor in consumer decisions, motivating behavior change and not just raising revenue.

Easy-to-demonstrate impacts

Soda taxes benefit from measurable, understandable, and easy-to-publicize outcomes. Whereas other interventions might have to rely on more subjective reporting to approximate benefits, the impact of soda taxes can be measured through sales, pricing, and tax revenue raised. Additionally, it is relatively simple to show that the revenue raised by the tax is being used for a public benefit.

The Berkeley City Council allocated $1.5 million dollars for the 2015 fiscal year to public health efforts, including school nutrition programs, public health staff increases, and grants to reduce access to and purchase of SSBs.^[5]This number was not random; rather it was based on revenues from the tax ($1.2 million in the tax’s first 9 months) and motivated by a citizen board specifically focused on the health impacts of sugar-sweetened beverages.

Sales and prices of soda and other SSBs, as well as non-sugary alternatives like water, can be measured as well. Berkeley saw a statistically significant (p=.046) 21% decrease in SSB consumption while neighboring cities saw a 4% increase, and a 63% increase in water consumption compared to only 18% in neighboring cities.

Ability to Inspire

More than just raising revenues, the Berkeley Soda Tax played a role in motivating similar measures elsewhere. In 2014, more than a dozen different cities and states had proposed local soda taxes.^[6] All of them failed except Berkeley’s, making Berkeley the first city with a SSB excise tax by default. Since then, Philadelphia’s city council approved a penny-per-ounce tax in early 2016, and the cities of San Francisco, Oakland, and Albany, California, and Boulder, Colorado approved soda taxes by popular vote in November 2016. Days after these votes, a decision by the Board of Commissioners made Cook County, Illinois (home to Chicago), the largest metropolitan area yet to implement a soda tax.

Cost Effectiveness

It isn’t hard to argue that soda taxes are cost effective. Although initial campaigns can be costly (the Berkeley pro-soda tax campaign cost about $3.4 million),^[7] once the taxes are in place, they raise revenue rather than costing money. Predictions during the Berkeley campaign estimated that the tax would raise $1.2 million per year. The tax took effect in May 2015, and $1.2 million had already been collected by January 2016 – after only 9 months. Ideally, revenues will actually decline as soda consumption drops, but a pace like this indicates that the Berkeley tax will “break even” within three years. Additionally, the money raised for the campaign did not come from the government, so the city experienced positive returns, and it began funding public health initiatives within the tax’s first year.

Drawbacks and Limitations

While, as mentioned above, the monetary nature of taxes makes their benefits and impacts easy to measure, it also allows for more direct counterarguments. At baseline, people can certainly be less than eager about new taxes and regulations. Moreover, opponents of soda taxes on more recent ballots have worked hard to characterize them as regressive “grocery taxes,” with stores raising the prices of other foods to keep soda sales up, although there is no evidence of this effect in Berkeley. A good deal of attention ought to be paid to this question in Berkeley and in other cities and counties that follow suit with these taxes.

Additionally, Berkeley was a very health-conscious community well before 2014. At least at present, a 75% popular vote would be nearly impossible in most places in the United States, let alone even a simple majority. Therefore, the stunning success of the Berkeley movement isn’t necessarily indicative of the possibilities or best practices for other communities.