Why The “Soda Tax” May Not Be So Sweet After All

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Why The “Soda Tax” May Not Be So Sweet After All

My favourite drink in the whole world is Diet Coke. Imagine my horror last year when I noticed that Coca-Cola decreased the size of its most popular bottle from 591mL to 500mL(1). Why? Because obesity is a serious problem in North America and as awareness grows sugary drink manufacturers’ sales shrink. Brands like Coke and Pepsi have been working for years to maintain popularity among health-conscious North Americans. First came Diet Coke and Diet Pepsi targeted towards women who wanted to stay slim. Next came Coke Zero and Pepsi Max targeted at men looking to avoid sugary drinks(2). However, it doesn’t help consumers worried about unnatural chemicals, like aspartame. In response to those concerns, Coca-Cola came out with a number of ‘healthy’ beverages, like Vitamin Water and Powerade. Similarly, Pepsi offers Gatorade and Pure Leaf tea(3).

Source: http://images.huffingtonpost.com/2013-11-21-Cokepetition.jpg

Yet with all these healthier alternatives people still reach for a classic Coke or Pepsi. At the end of the day, some people just don’t care about the negative health effects or the myriad of other options. I read about how aspartame might cause cancer and watched that video of the tooth decaying, but I still buy and drink Diet Coke. Am I slowly drowning my kidneys in a flood of chemicals? Probably. Do I care? Yes – enough to limit how much I drink, but not enough to stop drinking it altogether.

Soft drink consumption causes diabetes and obesity, which are both a strain on the healthcare system(4). In recent years, politicians all over the world have argued for the implementation of a ‘sugar-sweetened beverage tax’, or SSB tax. The tax aims to decrease soda consumption; in particular, to lower consumption in low-income areas, where diabetes and obesity affect more people and where price changes have a more significant impact on purchasing patterns(2).

The tax would affect beverages meeting the following conditions:

  • Non-alcoholic
  • Containing any sugar-based sweetener, including sucrose, glucose, and high fructose corn syrup
  • Containing any artificial sweeteners, such as stevia, aspartame, and neotame(4)

So far France, Great Britain, Mexico, and Hungary have put nationwide SSB taxes into effect, with success. In 2014 Berkeley implemented the tax, becoming the first American city to do so. The tax was one penny per ounce and soda consumption decreased by 22% in low-income neighborhoods. In July, Philadelphia also passed the law; the tax will come into effect in January, 2017(2).

Essentially, the tax raises money for the government while helping to reduce obesity and diabetes (along with their associated healthcare costs). Sounds like a win-win, right? It’s not so simple. Many people argue that the government should let people make their own decisions. Big beverage companies like Pepsi and Coca-Cola argue that the government is arbitrarily selective in targeting sugary drinks when they make up only 10% of the average American’s calorie intake(5). Basically, if the government starts taxing sugary drinks, what other unhealthy products are next?

On the other hand, isn’t a tax that promotes healthy choices good for everyone? High taxes on cigarettes and alcohol already discourage people from making those unhealthy choices. Why shouldn’t the government do the same for sugary drinks? At the same time, will it actually work? The same study that showed the significant (~20%) decrease in soda consumption in Berkeley noted that other factors might have played a role, like the increase in public awareness(5). In advance of the Berkeley vote to decide the government put out a number of ads describing the negative effects of sugary beverage consumption. Is the answer to increase the price through taxes or to invest in public education on the matter? Obviously the first is more beneficial to the government, but the second might be better for consumers.

There are also those who predict that the decrease in sugary drinks consumption won’t last. Typically, consumers are more likely to react to price changes when they’re new. It’s too soon to tell if the trend will continue(6). A more permanent solution might be warning labels. There are efforts in progress to require warning labels on sugary drinks, similar to those on cigarette cartons. The American Beverage Association (the main lobby group for big beverage companies) has been fighting it, arguing that other unhealthy products, like fast food, don’t require any kind of warning labels, so why should sugary drinks(5)?

Source: http://www.apextribune.com/wp-content/uploads/2016/01/Sugar-Warning-Labels-Could-Make-Us-Buy-Fewer-Sodas.png

I’m not sure how I feel about the tax. People should be free to make their own decisions, without interference from the government. On the other hand, it makes sense that the government taxes or prohibits dangerous products, like cigarettes and illegal drugs. I also think about how this tax could work in Canada. Unlike America we enjoy free healthcare – how much could we save in healthcare costs by implementing an SSB tax? Efforts are already in progress to implement the tax here. If the tax is as successful as predicted in America those efforts could become a reality.

Canadian citizens don’t have to decide anything just yet. However, citizens of Boulder, Colorado and San Francisco, Oakland, and Albany, California will vote on the SSB tax on November 8, 2016. The California cities are proposing a 1 cent/ounce tax and Boulder is proposing a 2 cent/ounce tax. The initiative stands to have a significant impact on big beverage companies and consumers alike. Only time will tell what decision voters will make and, if implemented, how successful the tax will actually be in improving Americans’ health.

Written By:

Samantha Schmidt

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1 http://www.ctvnews.ca/business/coca-cola-reducing-size-sweetness-of-beverages-in-canada-1.2208933

2 http://www.businessinsider.com/soda-tax-proposals-that-should-terrify-coke-pepsi-2016-10

3 http://www.businessinsider.com/4-big-beverage-industry-trends-in-2016-2015-12

4 https://www.hsph.harvard.edu/nutritionsource/2016/10/25/spotlight-on-soda/

5 http://www.wsj.com/articles/soda-consumption-falls-after-special-tax-in-california-city-1471982400

6 http://www.npr.org/sections/thesalt/2016/08/23/491104093/berkeleys-soda-tax-appears-to-cut-consumption-of-sugary-drinks

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