Less than two months after implementing a new “soda tax,” lawmakers in Cook County, Illinois, are repealing the cent-per ounce tax. The Washington Post and others paint it a “major victory for Big Soda,” but county residents recognized the tax for what it was: a bald-faced attempt to raise revenue off the backs of Chicago’s poorest residents. What they may not have realized is that the tax was also an attempt by public health advocates to use their city as a means to convince other, less liberal municipalities to follow their path. Luckily for the rest of the country, the effort has failed.
The Cook Country Board was split on the soda tax issue back in November, with the measure winning by just one vote. Two months later the Board finally reached a consensus: voting almost unanimously (15-1) to repeal the tax due to growing public pressure.
Public health advocates hoped the Chicago tax would be a launching pad for efforts in more cities, but the failure should take some fizzle out of their future plans. While health nannies, like former New York Mayor Michael Bloomberg, who dropped at least $5 million defending the Chicago soda tax in the last six weeks, doubtless believe the failure is a win for industry, the actual winners are consumers in Chicago and the rest of the nation.
Public health advocates have long eyed soda or, as they like to call it, sugar-sweetened beverages, as a cause of obesity. Taxes on soda producers, which are almost always passed along to consumers, raise the purchase price of such beverages and supposedly deter people from buying them. But research into the issue of obesity does not bear out the idea that soda is, in and of itself, a major contributing factor to expanding waistlines—no more responsible than the consumption of other types of calories or reductions in physical activity.
A study published this year in the American Journal of Clinical Nutrition, for example, found that obesity rates in Australia increased despite significant long-term declines in sugar intake. As the authors noted, such findings “challenge the widespread belief that energy from added sugars or sugars in solution are uniquely linked to the prevalence of obesity.”
Furthermore, despite what health nannies like former Mayor Bloomberg want to believe, taxes on soda don’t appear to have much effect on population weight. As I’ve previously written, ongoing studies in Mexico—which enacted one of the world’s highest soda taxes—didn’t change the overall calorie consumption or weight of Mexican consumers. In fact, the purchasing and consumption patterns of families with obese heads of the house were the least affected by the tax.
What the tax in Mexico did do was funnel a lot of money—$1.3 billion in 2014—out of consumers’ pockets and into government coffers. Most disturbingly, it appears that a disproportionate amount of that money came from those with the least amount of money. Those in lower socioeconomic strata were the least likely to alter their purchasing behavior in response to the increased prices.
When health nannies can’t sell the public on the health benefits of soda taxes, they turn instead to convincing politicians of its revenue-generating potential. But, as Philadelphia’s now reviled soda-tax experiment demonstrates, the economic math rarely add up. Unlike Mexico’s tax, which was imposed on the entire nation, shoppers in one city with a soda tax can easily (if they’re wealthy enough to have personal transportation) buy their groceries—including soda—outside of the city limits. While Philadelphia’s tax did bring in $40 million dollars, the amount was far less than projected. Furthermore, the decline in profits, which industry blames on the tax, led to layoffs at major beverage companies. That led many in the city to wonder if the money, which was partially used to fund a universal pre-k program, was worth the costs.
Voters aren’t fooled by rhetoric about revenue or health. Soda taxes are job killers and a stealth tax on the poor. Just ask Santa Fe Mayor Javier Gonzales, who had hoped to launch his big for governor of New Mexico on the back of his soda tax-funded preschool program. After voters roundly rejected the proposal, Gonzales abandoned plans to run, not only for governor, but also for reelection as mayor. Avaricious politicians should take note or the jobs killed by soda taxes might be their own.