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San Francisco Soda Tax: Let the Battle Begin

  • Dec 9, 2013 | Gail Cole

 San Francisco's proposed soda tax: what are the odds?

If several members of the San Francisco Board of Supervisors have their way, the November 2014 ballot will include a proposition to tax sodas and many other sugary beverages.

If the Beverage Association has its way, San Franciscans will never approve a soda tax.

Let the battle begin.

The proposed soda tax

A few days before Halloween, Supervisor Scott Wiener announced his proposal to tax sugary beverages. Under his plan, revenue generated by the tax would fund “nutrition, physical activity, and health programs in public schools, parks, and elsewhere.” One third of the revenue would go to the San Francisco Unified School District, 1/3 would go to the Recreation and Park Department, and 1/3 to the Department of Public Health and the Department of Children Youth and Their Families (DCYF). The tax would generate approximately $30 million a year.

According to the Fact Sheet on Supervisor Scott Wiener’s Proposed Sugary Beverage Tax, epidemic health problems “directly attributable to sugary beverages” include:

  • Diabetes;
  • Obesity;
  • Non-Alcoholic Fatty Liver Disease (NAFLD); and
  • Increased risk of heart attacks and stroke.

More than one-third of Americans are pre-diabetic. As the fact sheet explains, “Medical experts estimate that without a reduction in the consumption of sugary beverages, one in three people born today will develop diabetes in their lifetime…. That is a public health epidemic.”

The fact sheet notes that the American Heart Association lists carbonated soft drinks as “the single biggest source of calories in the American diet.” The proposed soda tax would ideally curb consumption. Research at the University of California San Francisco (UCSF)  predicts “that even a one-cent per ounce tax on sugar sweetened beverages could cut sugary beverage consumption by up to 10%, with significant reductions in cases of diabetes, obesity, and heart disease, as well as the costs associated with treating them.”

Supervisor Wiener’s proposal would create a “tax of two cents per ounce on the distribution of soda and other sugar-sweetened beverages in San Francisco.” It would apply to “non-alcoholic beverages with added sugar where the beverage has at least 25 calories per 12 ounces.” A 12-ounce can of soda (not diet soda) would be taxed at 24 cents.

Another soda tax has been proposed by the San Francisco Board of Supervisors, by Supervisor Eric Mar. Similar to the Wiener proposal, it would place “a 2-cents per ounce levy on drinks with added sugar.” The plans differ only in the “when and how.” Supervisor Mar wants to see “those most impacted by health issues associated with sugary beverages—namely, low income and communities of color—get the lion share of the funding.” Under the Mar plan, half of the revenue generated would go to the school district for nutrition and physical education programs, and half to “various city agencies and community groups that target those who are affected.”

Two plans to become one

Ultimately, the San Francisco Board of Supervisors plans to present one piece of legislation, which will be on the November 2014 city ballot. Already, both Wiener and Mar are stressing the similarities between their plans, rather than the differences. They intend to present a unified front, which both recognize is essential given the power of the opposition.

The opposition

According to an article in SFGate, “Big Soda” is “already gearing up for a fight” in San Francisco. Chuck Finnie, spokesman for the industry says there is "no question that the American soft drink industry is going to oppose taxes like the one proposed by Supervisors Wiener and Mar just as they have in other communities that have voted them down.” Soda taxes were defeated by voters last year In Richmond and El Monte, both in Los Angeles County.

Finnie has pointed out flaws in the local measures: The Mar tax “taxes canned and bottled sodas, but not fountain drinks like those served at fast-food restaurants and movie theaters.” The Wiener tax “would tax bottled coffee drinks with added sugar but not, for example, the sugary Frappuccinos laden with whipped cream that Starbucks baristas prepare.” He has also questioned the USCF research quoted in the Wiener fact sheet, saying the researchers “are biased because they have been longtime crusaders against added sugar in food and drinks.”

In response, Supervisor Wiener notes that discrediting science has long been a tactic of the oil and tobacco industries. “When it comes to the credibility on public health in San Francisco, I’ll take UCSF over the beverage industry any day of the week.”

A good fight

The American Beverage Industry knows how to fight. The industry spent $2.5 million to crush the proposed soda taxes in Los Angeles County, and voters said no to it. On the other side of the country, the industry took the New York City Department of Health and Mental Hygiene to court to fight Mayor Michael Bloomberg’s ban on the sale of sugary beverages larger than 16 ounces. At the 11th hour, they won. Although the mayor and the NYC Department of Health continue to seek “to prohibit the sale of sugary drinks in containers of more than 16 fluid ounces at restaurants and food carts,” and although some restaurants in the city have voluntarily adopted the ban, the future of the ban is uncertain.

Californians for Food and Beverage Choice, an organization created by the American Beverage Industry, has started the drum roll against both proposed San Francisco beverage taxes. Their stance will undoubtedly strike a nerve with many voters: “We believe consumers should decide what goes into their shopping carts, not governments.”

If the San Francisco soda tax indeed makes the 2014 ballot as planned, two-thirds of voters must approve it in order for it to take effect.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.