An Urban's Rural View

Bernie Sanders Gets Dragged into California Soda Tax Fight

Urban C Lehner
By  Urban C Lehner , Editor Emeritus
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At first glance, this August 29 headline in the San Francisco Chronicle looks like fresh evidence that politics makes strange bedfellows: "Big Soda gets boost from the Bern in SF and Oakland (…)."

Yes, that's the old socialist from Vermont they're talking about. People don't think of Bernie Sanders as a corporate booster. But according to the Chronicle, the American Beverage Association is channeling Sanders in its fight against proposed soda taxes in two California cities.

On April 24 published a Sanders opinion piece blasting a proposed 1.5 cent-per-ounce soda tax in Philadelphia. He called it "a regressive grocery tax that would disproportionately affect low-income and middle-class Americans (…)." The tax was later enacted.

Now the soda-tax debate has moved to San Francisco and Oakland, where voters will decide in November whether to impose a penny-an-ounce tax on sugary drinks. According to Politico, the beverage industry has booked $9.5 million of television air time to defeat what it is calling -- guess what? A "grocery tax (…)."

On the surface, this seems richly ironic. Does anyone think Sanders likes big corporations? Does anyone think he got a lot of primary votes from beverage-industry execs? Yet here they are, seemingly on the same side of a controversy making the same argument. According to the Chronicle, Big Soda is getting "a surprise helping hand from Bernie Sanders, of all people."

But is it, really? Yes, both Sanders and the industry oppose soda taxes. Yes, both call them grocery taxes. But if you parse their pronouncements, they don't seem to be saying quite the same thing.

For the industry, it's a "grocery tax" because it will mean higher food prices. Why would food prices go up if the tax is on soda? The ABA assumes grocers will not pass on the full amount of the tax in the retail price of the beverage; the tax is imposed on distributors, including grocery stores, not on consumers directly. The ABA thinks grocers will spread the additional cost of soda across a number of products, including food.

Sanders, by contrast, seems to assume that the full burden of the tax would be passed on to consumers in the retail price of a soda. Why is it a "grocery tax," then? Sanders doesn't say. It's almost as if, to him, "grocery tax" is a throwaway line. His editorial is focused on Philadelphia using a "regressive" tax that affects the poor "disproportionately" to fund early education rather than an income tax on the rich.

In short, while both the industry and the Bern oppose soda taxes and call them grocery taxes, they're strange bedfellows only in a strained way. The soda companies are talking about food prices. Sanders is talking about how to pay for early education.

Despite the Chronicle's attempt to link the Bern and the beverage makers, the important question isn't whether they're bedfellows. It's whether either has a good argument.

Are the companies right about soda taxes getting passed on to consumers in higher food prices? A Mother Jones reporter interviewed a few grocers in Berkeley, which imposed a soda tax last year, and concluded there was "some truth" to the assumption its cost got spread to food (…). But apparently no one has systematically studied the matter.

Is Sanders right in thinking consumption taxes hit lower-income people harder? Probably yes, because research suggests they drink more sugary drinks than other Americans (…) and because even without the tax they spend a higher percentage of their income on soda.

On the other hand, diabetes is more common among low-income families, so a soda tax might improve their health (…). And, while no one likes the "nanny state," taxpayers cover some of the health-care costs of lower-income people, so the public arguably has a right to a say.

Some of these worries about the impact on the poor assume soda taxes work -- that they actually discourage soda consumption. But do they?

Researchers at the University of California at Berkeley say consumption of sugary drinks fell by a fifth in the city's poor neighborhoods since a soda tax was imposed there. They reached that conclusion, though, by asking consumers to recall changes in their behavior (…).

For its part, the Chronicle looked at the tax revenue raised in Berkeley and concluded there'd been only a slight decline in soda consumption -- or maybe, massaging the figures a bit, even an increase.

Both methodologies are open to argument. Recollections can be unreliable. Can people accurately remember how much of which beverages they consumed many months ago? Tax revenue is more easily quantified but can be deceptive. Because the tax is on distributors, the tax revenue may or may not track end-user consumption. It depends on how much of the tax was passed on in higher soda prices and how much, if any, went into the price of food.

Another point: A 10-cent or 20-cent tax might discourage consumption, but is a penny or two an ounce high enough to make a difference? If not, there's a real possibility the tax will hurt the pocketbooks of low-income people without improving their health.

Only in headline-writer hyperbole is Bernie Sanders "giving a boost" to Big Soda. But it isn't surprising that they seem to be on the same side of the issue. It is, after all, a lot easier for the industry to champion lower grocery prices than to justify not taxing beverages containing nine teaspoons of sugar per 12 ounces.

Urban Lehner



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