Ballots in two cities aim to keep soda taxes from falling flat

Kids are drinking sugary beverages—a lot more, according to recent research. Consumption worldwide has increased 23%, despite the beverages’ known health risks. As the nation struggles with epidemic levels of childhood obesity, many see so-called soda taxes as crucial for reversing the trend. 

At least that’s the case in California, where residents in two cities will be voting in November on ballot measures aimed at curbing residents’ consumption of soda and other artificially sweetened beverages.

Residents in Berkeley and Santa Cruz will vote for or against proposed taxes on sugar-sweetened beverages like soda. These taxes bring in considerable revenue, said Richard Auxier, principal policy associate at the Tax Policy Center, a D.C.-based think tank. “Every city that has a soda tax has more money in their budget.”

But the taxes, one expert says, are generally framed as a public health measure, as sugar is linked to adverse health conditions like obesity, diabetes, dental issues and heart disease.

“Sugar-sweetened beverages are a natural target for a tax on sugar because they don’t offer any nutritional value at all,” said Scott Kaplan, assistant professor of economics at the U.S. Naval Academy. “There’s not really any positive value that people are accruing from a diet standpoint.”

As the U.S. grapples with heightened obesity and diabetes rates among Americans of all ages, Kaplan said local beverages taxes are one tool policymakers can use to improve public health.

Kaplan authored a study, published earlier this year in JAMA Health Forum, that found that soda taxes in five U.S. cities show promising impacts on community purchasing and health habits. According to the study, sugar-sweetened beverage taxes accounted for a 33% increase in sugar-sweetened beverage prices and a 33% decrease in purchases of sugary drinks.

The decline in sugary beverage purchases lasted for months after the taxes were imposed. “That’s important because it wasn’t just a short-term effect or shock on consumption [patterns],” Kaplan said.

Berkeley was the first city in the nation to levy a tax on sugar-sweetened beverages when voters overwhelmingly approved a ballot measure in 2014. From 2015 to 2021, the tax generated more than $9 million in revenue or nearly $1.2 million annually that the city then pumped into nutrition education programs in schools.

Two other California cities—Albany and San Francisco—have levied taxes on sugar-sweetened drinks since 2017 and 2018, respectively. Across the U.S., other cities with a soda tax include Boulder, Colorado; Oakland, California; Philadelphia; Seattle and Washington, D.C. (These were the five cities in Kaplan’s study.)

In November, Berkeley residents will decide whether or not to indefinitely extend the tax beyond Jan. 1, 2027, when it is set to expire. At the same time, about 75 miles south, Santa Cruz residents will vote yes or no to implementing a local soda tax. If approved by voters, the ballot measure would impose a tax of 2 cents per fluid ounce on the distribution of sugar-sweetened beverage products. The policy could bring in as much as $1.3 million for the city in its first year and would help fund improvements to public parks, beaches, and wellness and community programs for residents.

This is not the first time that Santa Cruz has tried to tax sugary drinks. It attempted to in 2018, but abandoned the effort when the legislature approved the same year a law restricting the passage of local soda taxes until 2031. The state law did not restrict preexisting taxes like Berkeley’s from continuing as long as localities did not increase the tax rate. A 2021 court decision, however, found a part of the law to be unconstitutional. 

Auxier said it’s not uncommon to see states pass preemptive laws to stymie local initiatives like soda tax efforts, particularly when industry groups support the policies. Beverage companies are often opposed to such taxes because they can suppress product sales and drive consumers away from retail stores selling sugar-sweetened drinks. At least three other states—Arizona, Michigan and Washington—have state-level laws banning local soda taxes.

“We oppose the Berkeley tax for reasons that are similar to our opposition to the tax in Santa Cruz—it harms working families, small businesses and their employees the hardest,” William Dermody, vice president of media and public affairs, at the American Beverage Association, said in an email to Route Fifty. “Also, many studies have shown that these taxes do not improve public health or reduce obesity rates.”

Dermody pointed to a 2023 study from the University of California Davis that found soda taxes are regressive measures, meaning they impact low-income consumers the hardest as they are more likely to spend a larger share of their income on less expensive goods like sodas and other artificially sweetened products.

The hope behind soda taxes, however, is that they will reduce health costs for lower-income individuals, who are also more likely to live with sugar-related health complications, by discouraging their purchases of sugary beverages when their price increases, Kaplan said. And if more people have healthier outcomes, he added, then that could reduce premium costs for the general population.

But despite these arguments, numerous studies demonstrating the tax’s health benefits and research showing economic gains, the soda tax movement has stalled because of continued state efforts to block local beverage taxes, according to Auxier. How the two California measures fare could say a lot about the future of the tax. 

The sugar-sweetened beverage tax “is an available source of revenue,” Auxier said. “When governments struggle to meet budgets … there is always a chance they could pick it back up again.”