Key Topics

Taxes

The non-alcoholic beverage industry’s products are often unfairly singled out for discriminatory taxation. 

Some portray beverage taxes as an untapped source of money to improve public health or fill budget gaps. The documentary The Truth About Beverage Taxes shows the true cost of a tax on consumers and small business people, and how the tax does not work as proponents say it will.

The Truth About Beverage Taxes begins in Berkeley, Calif., where city leaders backed Measure D, a penny per-ounce tax on the distribution of beverages containing sugar that went into effect June 2015.

The documentary illustrates how Berkeley is struggling to implement the beverage tax and goes on to show what has happened in Mexico, where a similar tax has been in effect since 2014. Mexican health professionals, businesspeople and ordinary citizens describe their experience with this tax. From what they are experiencing, the outlook for Berkeley is not good. In Mexico, beverage taxes:

  • Hurt the poor
  • Do not stop people from buying soda
  • Harm small businesses

 

Truth About Beverage Taxes: Spanish from The Truth About Beverage Taxes on Vimeo.

 To learn more about the documentary please click here.

Please click here to access additional documentary clips.

To meet the experts from the documentary click here

 

The Facts on Taxes

Soda taxes are ineffective at combating obesity and damaging to local businesses. Check out the research that shaped the movie right here.

 
“In 1914, following a decline in important tariffs, President Woodrow Wilson proposed a special excise tax on soft drinks.”
Source: Wilson Proposes Soft Drink Tax (Hawaiian Gazette, 9/1/1914)
 

“Three U.S. states with some of the highest obesity rates – Tennessee, West Virginia, and Arkansas—all have some form of soda tax in place.”
Source 1: Mississippians Most Obese, Montanans Least Obese (Gallup, 3/4/2014)
Source 2: Taxes on Soft Drinks or Candy (OLR Research Report)
Source 3: State with the Highest Obesity Rates (Accessed 01/13/2015)
 

“…Denmark has had a soda tax on the books since the 1930s. Though the country recently repealed it.”
Source: Denmark to scrap decades-old soft drink tax, (Food Navigator, 4/25/2013)
 

“…Voters in Berkeley approved Measure D, a penny per-ounce tax on sugar-sweetened beverages.”
Source: Nation’s First Soda Tax Passed in California City (Time, 11/5/2014)
 

“While a penny-per-ounce doesn’t sound like much, it can add up to a price increase of almost 200 percent for a two-liter bottle of soda.”
Source: Berkeley Measure D Costs & Facts (advertisement appearing in Contra Costa Times, 11/1/2014)
 

“This is not just a tax on soda. Hundreds of beverages are impacted by this tax.”
Source: Berkeley City Ordinance – Imposing a General Tax on the Distribution of Sugar-Sweetened Beverage Products
 

“Rather than tax consumers directly for their soda purchases…it is left to the discretion of the shop owner.”
Source: Berkeley City Ordinance – Imposing a General Tax on the Distribution of Sugar-Sweetened Beverage Products
 

“Elected officials here promised that tax revenue would also benefit clean drinking water initiatives in public schools across the country.”
Source: Mexico enacts soda tax in effort to combat world’s highest obesity rate (The Guardian, 1/16/2014)
 

“Enacted in 2013, this tax increases the price of sugar-sweetened products by about fifteen percent…”
Source: ANPRAC “Effects of the IEPS on Flavored Beverages” Slide 1 (Link to PDF)
 

“The sale of sodas and other sugar-sweetened beverages is down by a little over two percent…”
Source: Nielsen
 

"The sale of health and beauty products also went down by two percent.”
Source: Kantar WorldPanel, New Taxes Realign Mexican Household Expenses (Link to PDF)
 

“Following the implementation of the 2013 tax package – more than twenty-five thousand neighborhood stores were forced to shut their doors…near the Guatemala border where poverty and crime is already rampant.”
Source: ANPEC Press Release, “Economic policies led to the closure of “neighborhood stores” and place small shopkeepers in survival mode” (Link to PDF)

 

IN THE NEWS


Confusion Among Berkeley Retailers on Who is Supposed to Pay New Taxes on Sodas
CBS San Francisco • April 1, 2015

They knew it was coming, but that doesn’t make Berkeley’s new soda tax any easier to swallow. Among retailers and restaurants, there is confusion about who is supposed to pay the new 1-cent per-ounce tax on sugary beverages. Read more.

Opinion: Soda Tax Misguided
Burlington Free Press • April 1, 2015

The soda tax in Mexico is often cited as showing that it lowers soda intake. Yes, but does it lower obesity? That is unknown. Read more.

NY Sen. Gillibrand Argues Against Soda Tax
FoodDive • March 27, 2015

Gillibrand’s other primary argument is that even with a soda tax, many people will still buy soda, so a tax wouldn’t be the most effective option. The tax would simply take away money that people could use to buy fruits, vegetables, and other healthy foods. Read more.
 
Berkeley Finds It’s Not Easy Imposing Soda Tax
PublicCEO • March 9, 2015

The city of Berkeley, Calif., is finding it’s not easy imposing a soda tax. Since the tax’s Jan. 1 imposition, retailers find it’s a burden changing prices for just one type of item in one city.Read more.

Soda Distributors Frustrated at City of Berkeley’s Lack of Guidance on Soda Tax
Berkleyside • March 2, 2015

Several local distributors of sodas and sugary drinks—the sole group responsible for paying the 1-cent-per-ounce tax—share Malaver’s sentiments, arguing that the city has delivered little to no guidance since the passage of the tax. Read more.
 
Have a Coke and a Frown: Berkeley, California’s New Soda Tax Can’t Both Curb Obesity and Raise Significant Tax Revenue
U.S. News & World Report • Nov. 25, 2014

Just in time for Thanksgiving – the holiday season when most Americans put on a few pounds – citizens of Berkeley, Calif., approved a ballot measure that would impose a one-cent tax on each ounce of soda. Their goal is to counter the trend of increasing obesity, which advocates of the tax blame largely on soda and other sugar-sweetened drinks. But while the city’s goal to improve the health of its citizens is laudable, its policy is misguided and may in fact cause more damage than good. Read more.
 
Coca-Cola FEMSA cuts 1,300 jobs as Mexico Soda Tax Bites
just-drinks • Oct. 23, 2014

Coca-Cola FEMSA has had to cut around 1,300 jobs as it copes with Mexico’s new soda tax, but volumes are not being as badly affected as predicted, according to its CFO. Read more.
 
Mexican Soda Tax Effect Waning, Coca-Cola Femsa Says
The Wall Street Journal • Oct. 22, 2014

Sparkling beverage sales declined modestly during the third quarter for Coca-Cola Femsa, signaling Mexico’s new tax on sugary drinks might be having less of an impact on consumer spending than at the start of the year. Read more.
 
Taxing Drinks Gives Pols a Sugar Rush
Fortune • July 25, 2014

There have been studies coming to various conclusions about soda taxes, but the bottom line is that they aren’t fair and, for the most part, they don’t work. Read more.
 
Coca-Cola Femsa Sees Thirst for Soda Overcoming 2014 Tax
Bloomberg • July 22, 2014

Coca-Cola Femsa SAB, the world’s biggest franchised Coke bottler, is recovering from Mexico’s effort to curb the nation’s sugar addiction by taxing soft drinks. Demand is proving so resilient that Rodrigo Echagaray, a Scotia Capital analyst, now sees the company’s 2014 volumes in Mexico falling only 4 percent, half his original estimate. Read more.
 


Research Finds Soda Tax Does Little to Decrease Obesity
University of Wisconsin-Madison News • March 24, 2014

Extra sales taxes on soda may not do anything to improve people’s health, according to new research from health economist Jason Fletcher of the La Follette School of Public Affairs at the University of Wisconsin-Madison. Read more.
 
What’s the Right Way to Tax Sugary Drinks?
Los Angeles Times • Feb. 18, 2014

If you believe obesity is a serious health risk in the United States and sugary drinks are a major contributor to the problem—and that’s surely the prevailing nutritionists’ view—then a sugared beverage tax has to be on your radar screen. Now two university economists have found levying this sort of tax is the wrong approach. Read more.
 


With Its Soda Tax, Mexico Repeats the Mistakes of Mayor Bloomberg
Forbes • Oct. 10, 2013

By the middle of October, if everything stays on schedule, Mexico’s legislators may well prove that they haven’t learned a thing from policies that have been tried and failed, from Denmark to New York City. Read more.
 
Understanding the Heterogeneous Nature of the Demand for Soft Drinks in Mexico: Why Social Determinants Also Matter
Munich Personal RePEc Archive • July 2013

In order to design policies that adequately affect the demand for soft drinks on high consumers and benefit the poor, social factors should be considered. A comprehensive obesity prevention strategy should complement taxes with policies that affect social determinants such as the local provision of safe water and local food market conditions. Read more.
 
Denmark’s Fat Tax Harms Economy
National Center for Policy Analysis • June 6, 2013

Denmark’s tax on saturated fat was hailed as a world-leading public health policy when it was introduced in October 2011, but it was abandoned 15 months later when the unintended consequences became clear, says Christopher Snowdon, director of lifestyle economics at the Institute of Economic Affairs. The economic effects of the fat tax were almost invariably negative. Read more.
 
What the World Can Learn from Denmark’s Failed Fat Tax
Washington Post • Nov. 11, 2012

The Danish tax ministry announced Saturday it’s scrapping a fat tax it introduced in October of last year, saying the measure has only increased companies’ administrative costs and caused Danes to venture across the border to purchase their unhealthy snacks. Read more.
 
Soda Taxes and Substitution Effects: Will Obesity Be Affected?
Choices Magazine • 3rd Quarter, 2011

The focus on obesity is an important issue in this debate because much of the available evidence suggests that soda taxation may have negligible effects on obesity. If obesity was the main reason to consider taxation, then this evidence may imply that soda taxes may be unwarranted. Read more.

To see the ICBA's position on sugar sweetened beverage taxes click here. To learn more about these issues in your region please follow the links below.