Residents of Boulder, Colorado and three cities in the Bay Area — San Francisco, Oakland and Albany, California — all voted to implement taxes on sugary drinks on Tuesday. The California initiatives will tax sugar-sweetened beverages at a rate of 1 cent per ounce, while the Boulder tax will be 2 cents per ounce.
On Thursday, Illinois' Cook County — which encompasses Chicago and its suburbs — passed a similar penny-per-ounce tax that also includes drinks with zero-calorie sweeteners, such as diet soda.
The taxes, which will take effect over the course of the next couple of years, could serve as a turning point in the movement to tax sugary drinks in an effort to fight obesity and diabetes.
Healthy eating activists say that the passage of the soda taxes could significantly improve Americans’ health. A recent study by Harvard's T.H. Chan School of Public Health found that Bay Area taxes could result in a nearly 20% drop in soda consumption and decrease the incidence of diabetes by 4% in the area by 2018 when the taxes take full effect.
It's hard to know exactly how accurate these estimations are, as relatively few US cities have enacted taxes intended to reduce consumption of sugary sodas. Berkeley, California's soda tax,which passed in 2014 and went into effect in May 2015, has resulted in a 22% drop in soda consumption in low-income neighborhoods. In July, Philadelphia passed a tax of 1.5 cents per ounce of sugar-added and artificially sweetened soft drinks, but it's too early to see definitive health results so far.
Soda makers like Coca-Cola and Pepsi argue that the actual health benefits of soda taxes are negligible — and the companies are fighting their passage at every turn.
More than $40 million has been spent fighting the Bay Area soda taxes, $20 million of which came from the American Beverage Association, the soda industry's trade organization.
“We respect the decision of voters in these cities,” the ABA said in a statement following the passage of the laws. “Our energy remains squarely focused on reducing the sugar consumed from beverages — engaging with prominent public health and community organizations to change behavior.”
Executives at Coca-Cola and PepsiCo are staunchly opposed to the soda taxes.
“Soda taxes are there to balance budgets,” PepsiCo CEO Indra Nooyi said at a conference on Thursday. “They have nothing to do with public health.”
Sandy Douglas, the president of Coca-Cola North America said in a statement: "We believe there are better alternatives for encouraging moderation in sugar consumption than higher taxes."
Even though soda taxes may decrease consumption on a local level, it's unlikely they will have major impact on sales anytime soon. The bigger issue facing soda companies like Coca-Cola and Pepsi is public perception.
“Passage of all four of these measures underscores the increasingly negative sentiment around sugar,” Cowen and Company analysts Vivien Azer and Aaron Grey wrote in a research note on Wednesday.
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