Soda Tax: Is It Fair?
By Jean Godden
On the first day of the new year, it became more expensive to buy a can of sugary soda in Seattle. That is, it cost more if you bought that soda from a local store or supermarket. But, if you drove past Seattle limits (Tukwila or Shoreline), you could buy sugary pop for a lot less.
Costco, which operates stores outside city limits, has signage inside its Fourth Avenue store. The signs show that a case of Gatorade, once selling for $15.99, is now taxed $10.34 in Seattle, bringing the total price to $26.33. The Seattle tax rate stands at 1.75 cents per ounce, higher than in the 1-cent tax in San Francisco, but not as steep as Boulder, Colorado's 2-cent tax.
There are excellent reasons to make sweetened drinks more expensive. For one thing, the sugary drinks are heavily marketed to young people, to low-income communities and to people of color. The sugar-heavy, calorie-loaded beverages are not healthy for anyone. Put simply: Heavy consumption leads to poor health, disease, obesity and early death.
Proponents of the tax -- the Seattle City Council that approved it and former Mayor Ed Murray who proposed it -- believe that it will bring in $15 million a year. (Councilmember Lisa Herbold, who wanted lattes and diet soda also taxed, voted against the tax; Kshama Sawant was absent.)
The anticipated $15 million may be a little optimistic since that figure is based on revenue realized in other cities. Those cities all have differing tax rates, ranging from 1 to 2 cents, with various individual features. Do they tax diet sodas? What about weight-loss drinks, baby formula, coffee drinks, fruit juice and medicines?
Seattle's soda tax, as crafted, has dual aims. The tax is not only an important health measure, but it also will produce revenue for a number of worthy programs. The programs that will benefit are many and, in some cases, not yet fully identified.
The idea that $15 million -- if that's the number -- will fund educational and health programs is a good one. But the fact that there is uncertainty about which programs will benefit and by how much is unfortunate.
One-third of the expected receipts have already have been earmarked by the City Council. Nearly $2.5 million will go to the Fresh Bucks program which matches SNAP/EBT benefits up to $10 at farmers markets -- with some portion reserved for administrative costs. Another $1 million is set for summer learning programs. The Parent-Child Home Program will get a half million-dollar boost, while Our Best, an initiative to support young black men, will get $200,000.
A cool $1.5 million will go to administrative costs within the city, as well as a set-aside to assess the program's effectiveness and also to provide retraining for those working in the beverage industry who lose their jobs.
Then there's a $4 million pot awaiting review by a Sweetened Beverage Tax Community Advisory Board (SBTCA?) created to distribute money to food banks and early-learning programs. Finally up to $5 million is earmarked over the first five years of the tax for the 13th Year Promise Scholarship that allows graduating seniors to attend South Seattle College tuition free for one year.
One can hardly argue against any of these causes. However, there is a scattershot quality to expected benefits. It's as if someone opened a grab bag and each councilmember got to pick a pet program or two and, then, there had to be money set aside for administrative costs of the add-ons. What will it take to set up the Sweetened Beverage advisory board and pay expenses for members and staff? How much staff is needed to administer the childhood programs? Oversee summer learning?
An unfortunate aspect of the soda tax is its upside-down arrangement. First let's get some money and then decide how to use it, rather than the other way around. When Spokane was considering a similar tax -- since rejected, the aim simply was to hire more police, a rather straightforward proposal.
Currently there is "sticker shock" over the City Council's action approving the Soda Tax. The shock need not have happened if the tax and beneficiaries had been thought through. There are five principles of good taxation policy: fairness, adequacy, simplicity, transparency and administrative ease. In some ways, the Soda Tax -- despite unassailable intentions -- fell short on most principles.