D.C. Considers 1.5C-Per-Ounce Soda Excise Tax One Week After Implementing 2% Soft Drink Sales Tax
Today in “we must find new things to tax, even if we’ve already taxed them” news, Washington DC’s City Council is considering a plan to place a 1.5 cent per ounce excise tax on soda and other sweetened beverages, according to Fooddive.
The proposal comes just a week after the DC Council put an additional 2% sales tax on soft drinks and it already has support from 8 of the 13 DC council members. It will affect soda and any other sugary drinks, such as Gatorade, iced coffee and orange juice.
Drinks like diet soda or other beverages containing artificial sweeteners would be exempt from the tax, as would alcohol and beverages with milk as the main ingredient. The estimated $21 million in annual revenues the tax would bring in will go to educational and food programs.
Naturally, the beverage industry stands in stark opposition to the tax. Ellen Valentino, a spokeswoman for the DC Beverage Association, called the tax a “big mistake” and said “people will flee in order to purchase beverages and other grocery items outside the city’s borders.”
And yet again, it’s the consumers that wind up getting screwed: the tax would add about a dollar to the price of a 2 liter bottle of soda. This will cause manufacturers and retailers to likely hike prices to consumers. Some have speculated that since Washington DC is close to the Maryland border, people could travel across state lines for their soft drink needs.
These types of taxes have also been enacted in several cities in California, Boulder, Philadelphia and in the state of West Virginia. Cook County Illinois implemented a similar tax in 2017 but repealed it just months later after pressure from the American Beverage Association. California’s proposed tax didn’t make it through the state assembly this year, although it may be brought up again soon.
States like Arizona and Michigan have already passed legislation prohibiting local governments from adopting food and beverage taxes.
The effect of the tax has been noticeable where it has been implemented.
A study published earlier this year took five years of data from Berkeley, California, and found a 52% decrease in soda consumption in the first three years after the tax was adopted. After two months of Philadelphia’s soda tax, which is the same rate as the proposed D.C. excised tax, a study found residents were about 40% less likely to drink sugary drinks daily than those in other cities. Philadelphia’s tax projections, however, were lowered 15% in March 2018 and didn’t make major changes in the population’s consumption of healthier fare, so its tax could face a repeal.
Beverage makers are likely to posture up for a significant fight of the DC excise tax. The beverage industry has already spent $48.9 million since 2009 to work to oppose these taxes.
But two other groups of concerned individuals, the American Academy of Pediatrics and the American Heart Association, are both urging legislation to reduce consumption of sugary beverages, not only through taxes, but also through marketing campaigns. They argue that milk and water should be the default drinks for children in vending machines and that soda should not be allowed to be purchased with government benefits.