Oof. Seattle Sugar Tax Raises Soda Prices by 75 Percent

 

Seattle residents started the new year with a bad case of sticker shock followed by a sugar crash. A new tax of 1.75 cents per ounce was added to all sweetened beverages sold in the city. The move had public support in June when it was passed 7-1 by the Seattle City Council, but images of regret have been hitting social media as the bill came due Monday.

The prices at an area Costco showed that the tax increases the price of Gatorade by 65 percent and Dr Pepper by 75 percent. To avoid complaints from outraged customers, the discount chain posted an explanation of the steep price increase.

Where will all the new revenue go? Seattle officials expect a $15 million boost in the first year. Since this was sold as a health initiative, $2 million of that will expand a city program that gives fruit and vegetable vouchers to low-income families. Of course, only $400,000 will go to actual vouchers; the other $1.6 million stays with the government for “administrative costs.”

Philadelphia, which enacted a similar tax last year, overestimated the expected revenue. Sales of carbonated soft drinks fell 55 percent inside the city, while sales rose 38 percent in the towns that surround it. It achieved neither the financial goals nor the health goals.

When the Seattle tax was first proposed, a “racial-equity analysis” found that diet beverages should be included since they are more popular among whites and the wealthy people. The politicians shot this down since they know which constituents donate to and vote for them.

Like most of these beverage taxes hitting blue cities, what is and is not included are counter-intuitive. All meal replacement drinks, powdered mixes, and most sugary coffee drinks — such as those found at local mega-company Starbucks — are exempt.

So, if you buy a bottled lemonade, you pay the tax. If you buy Kool-Aid and mix it with water at home, no tax. If you buy a Venti Brown Sugar Shortbread Latte at Starbucks, the tax doesn’t apply. If you get a Tall Brown Sugar Shortbread Frappuccino, which has less sugar, it does.

Local convenience store owner Jong Kim is frustrated, to say the least:

“What can I do? I have no power,” he mused, shrugging his shoulders behind the counter at his store, Summit Foods. “Seattle is too expensive. Everything is a tax.”

Oh well, I’m sure this foolish new soda tax will turn out fine just like Seattle’s foolish minimum wage hike.

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  1. rico Inactive
    rico
    @rico

    James Lileks (View Comment):

    rico (View Comment):
    The logic of this tax strikes me as similar to that of taxing alcohol or cigarettes. It may help reduce consumption on the margin, and that is a good thing.

    The logic of this argument cedes to the state the power to set prices to influence your behavior. Not to go all paleo on the matter, but I can’t find the relevant clause in the Constitution.

    I’m not sure that levying a tax is the same as setting a price. The taxed entities retain the ability to set their prices, so I don’t see a constitutional question here. I think The Reticulator nails it in #25 in referring to this as a Pigouvian Tax (yeah, I had to google it, but I thought this article provided a great description).

    • #31
  2. Jules PA Inactive
    Jules PA
    @JulesPA

    Black Prince (View Comment):

    Hammer, The (View Comment):

    Black Prince (View Comment):
    I’m between two minds on this one. This tax seems to be very heavy handed, but there is an obesity/diabetes/fatty-liver disease epidemic in America and the over consumption of sugar is probably a major driver, if not the outright cause. The incidence of obesity and diabetes is so high it is absurd. Maybe this tax isn’t the most effective way of dealing with this problem, but something has to be done.

    Wrong. Nothing has to be done.

    If you don’t want diabetes, eat more responsibly. That’s your own damned problem. Or maybe we should start regulating everything? Make it illegal to lift with your back and not your knees, make a law about sitting too close to the television screen or reading in low light. How about a mandate on wearing your coat when it’s too cold outside; certainly we can ban gym shorts after November, right?

    Or maybe we should just ban diabetes, the common cold, and eventually death… It’s working for North Korea.

    So I guess you’re for legalizing all drugs?

    Soda is not pot, or heroin, or oxycontin.

    Hey, meet me under the bridge, we’ll get funny (I mean fat) on a 2L of Mountain Dew.

    • #32
  3. Jules PA Inactive
    Jules PA
    @JulesPA

    Black Prince (View Comment):

    Patrick McClure (View Comment):

    Black Prince (View Comment):
    I’m between two minds on this one. This tax seems to be very heavy handed, but there is an obesity/diabetes/fatty-liver disease epidemic in America and the over consumption of sugar is probably a major driver, if not the outright cause. The incidence of obesity and diabetes is so high it is absurd. Maybe this tax isn’t the most effective way of dealing with this problem, but something has to be done.

    No, something doesn’t. At least not by the government.

    Well, I’d be the first to admit that the American dietary guidelines over the past 50-odd years is one of the reasons why we’re in such a predicament.

    Skip the mountain dew, let’s meet under the bridge and drink a 2L of non-fat milk, while dunking 2 bags of Oreos. That always makes me feel better. (actually, I prefer whole milk.)

    • #33
  4. Jules PA Inactive
    Jules PA
    @JulesPA

    James Lileks (View Comment):

    rico (View Comment):
    The logic of this tax strikes me as similar to that of taxing alcohol or cigarettes. It may help reduce consumption on the margin, and that is a good thing.

    The logic of this argument cedes to the state the power to set prices to influence your behavior. Not to go all paleo on the matter, but I can’t find the relevant clause in the Constitution.

    Ammendment 72,

    your mother said to eat right.  Get your tush to the Amdt72 Soup Kitchen now.

    • #34
  5. thelonious Member
    thelonious
    @thelonious

    Not a fan of sin taxes but I’d love to see soda and junk food demonized like we’ve demonized cigarettes.  I think we’ve way underestimated the damage sugar and processed foods have done to our collective health.  It’s criminal in my mind to have soda machines in public schools.

    • #35
  6. Joseph Stanko Coolidge
    Joseph Stanko
    @JosephStanko

    rico (View Comment):
    Given the clear-cut health impact of Americans’ overconsumption of sugar and high-fructose corn syrup, soft drinks seem highly tax-worthy to me.

    How about we start by eliminating the billions in subsidies to the corn agribusiness sector?  That would raise the price of corn syrup, slimming both our waistlines and our budget deficit.

     

    • #36
  7. thelonious Member
    thelonious
    @thelonious

    Joseph Stanko (View Comment):

    rico (View Comment):
    Given the clear-cut health impact of Americans’ overconsumption of sugar and high-fructose corn syrup, soft drinks seem highly tax-worthy to me.

    How about we start by eliminating the billions in subsidies to the corn agribusiness sector? That would raise the price of corn syrup, slimming both our waistlines and our budget deficit.

    It would also make our gasoline more pure.

    • #37
  8. JustmeinAZ Member
    JustmeinAZ
    @JustmeinAZ

    Mistaken post. My bad.

    • #38
  9. James Lileks Contributor
    James Lileks
    @jameslileks

    thelonious (View Comment):
    Not a fan of sin taxes but I’d love to see soda and junk food demonized like we’ve demonized cigarettes

    This could be done quite easily: just as they airbrushed the cig out of FDR’s photos, we can use CGI to replace potato-chip consumption in movies with sticks of celery, or green beans. We can also adjust the movie ratings to let people know that potato chips and Coke are consumed without proper contextual condemnation.

    Or, we can *not demonize Gatorade.*

    • #39
  10. rico Inactive
    rico
    @rico

    Joseph Stanko (View Comment):

    rico (View Comment):
    Given the clear-cut health impact of Americans’ overconsumption of sugar and high-fructose corn syrup, soft drinks seem highly tax-worthy to me.

    How about we start by eliminating the billions in subsidies to the corn agribusiness sector? That would raise the price of corn syrup, slimming both our waistlines and our budget deficit.

    I’m all for it.

    • #40
  11. rico Inactive
    rico
    @rico

    The human body is not designed to process more than about 15 grams per day of sugars, far less than in one soft drink (which has 40 to 100 grams, depending on the size of the soft drink)…

    Dale E. Bredesen, M.D (internationally recognized as an expert in the mechanisms of neurodegenerative diseases such as Altzheimer’s)

    • #41
  12. Mike LaChance Inactive
    Mike LaChance
    @MikeLaChance

    Which part of basic economics do liberals just not get?

    • #42
  13. Eustace C. Scrubb Member
    Eustace C. Scrubb
    @EustaceCScrubb

    @mikelachance What part of basic economics do liberals get?

    • #43
  14. Randy Webster Member
    Randy Webster
    @RandyWebster

    Black Prince (View Comment):
    Well, prohibition clearly didn’t work, but would you be comfortable with legalizing all drugs? Maybe we would be better off if we did.

    I’m pretty convinced that the effects of the war on drugs are worse than the effects of the actual drugs, if that’s what you’re asking.

    • #44
  15. Randy Webster Member
    Randy Webster
    @RandyWebster

    Zafar (View Comment):
    It’s a Sin Tax.

    Sinners!!

    Guilty as charged.

    • #45
  16. Randy Webster Member
    Randy Webster
    @RandyWebster

    Joseph Stanko (View Comment):
    How about we start by eliminating the billions in subsidies to the corn agribusiness sector? That would raise the price of corn syrup, slimming both our waistlines and our budget deficit.

    Too easy (or too hard).

    • #46
  17. Larry3435 Member
    Larry3435
    @Larry3435

    Jon Gabriel, Ed.: The prices at an area Costco showed that the tax increases the price of Gatorade by 65 percent and Dr Pepper by 75 percent. To avoid complaints from outraged customers, the discount chain posted an explanation of the steep price increase.

    I would like it very much if every store posted the portion of its prices that go to pay all taxes.  After all, it is simple math that 100% of the taxes paid by businesses come out of the pockets of their customers.  They don’t have a printing press in the basement, churning out $100 bills.  The Democrats like to call any tax cut for businesses a “giveaway to millionaires and billionaires.”  Someone should ask Costco customers if they are millionaires and billionaires.  Because they are the ones paying the taxes.

    • #47
  18. Valiuth Inactive
    Valiuth
    @Valiuth

    In Chicago they also passed a sugar tax. It also made everyone angry, failed to raise the projected revenue and within a few months of it being passed was unpassed (as we literate like to say) because of public pressure. It was a ridiculous tax, one that turned a 5 buck 12 pack into a 8 dollar one. I discovered though that if you order your soda from a grocery delivery service like Peapod the tax was magically absent, presumably because the service bought its sodas outside of Cook County. Also given that the suburbs, Indiana and Wisconsin (another set of Chicago suburbs really) didn’t have the tax half the city could buy its soda’s elsewhere on their own.

    I predict repeal will follow shortly in Seattle. Don’t let them get away with it.

    As to this war on Sugar and comparisons of it to other specifically taxed and regulated substances like Alcohol and Nicotine. I think the science underlying the comparison is at least a one order of magnitude weaker then in any of those cases. Especially given that the majority of sugar consumed by people is starch which is just as caloric as sucrose. Sure sucrose can be metabolized faster and give you that sugar high, but the reality is that with respect to your body both products ultimately are processed to the same molecules, and feed into the same pathways. Thus a lb of bread and whatever the equivalent is in raw sugar are virtually identical give or take vitamins/fiber. This is why correlation studies between sugar consumption and disease are so much more murky. Sugar is an essential nutrient for your daily life. In some form or another your body needs to produce glucose, and it can only do so by digesting other sugars.

    Ethanol, nicotine, opiates, etc. while they can have physiological effects basically have no natural role in your physiology. Your body can tolerate certain amounts of them to varying degrees, but their absence will not be missed or felt. The same is not true for sugar.

    • #48
  19. Kozak Member
    Kozak
    @Kozak

    LOL. Cook County in IL tried this including diet drinks to make it more “fair”.  Sales in Chicago stores and even some fast food places cratered with people shopping in surrounding counties, and when they shopped, they bought everything, not just soda so the County lost not just the beverage tax but sales taxes on all kinds of food and other items and even gas tax revenue.   The peasant revolt forced them to back off. It also left a 200 million dollar budget hole on the anticipated revenue they already spent.

     

    The controversial Cook County pop tax is poised to fall flat.

     

    • #49
  20. Kozak Member
    Kozak
    @Kozak

    Eustace C. Scrubb (View Comment):
    I’m sure they will be as successful keeping soda out of Seattle as Chicago is at keeping guns out of their city.

    Great opportunity to open a store just outside Seattle city limits.  Instant millionaire.

    • #50
  21. Doug Watt Moderator
    Doug Watt
    @DougWatt

    I’ll tell you what I see in the photo used in this essay. I see dead polar bears, everyone of those cans when opened releases more carbon dioxide into the atmosphere. It’s time to put environmental wreckers into prison, taxing them is not enough.

    • #51
  22. Kozak Member
    Kozak
    @Kozak

    Black Prince (View Comment):

    Hammer, The (View Comment):

    Black Prince (View Comment):

    Hammer, The (View Comment):

    Black Prince (View Comment):
    I’m between two minds on this one. This tax seems to be very heavy handed, but there is an obesity/diabetes/fatty-liver disease epidemic in America and the over consumption of sugar is probably a major driver, if not the outright cause. The incidence of obesity and diabetes is so high it is absurd. Maybe this tax isn’t the most effective way of dealing with this problem, but something has to be done.

    Wrong. Nothing has to be done.

    If you don’t want diabetes, eat more responsibly. That’s your own damned problem. Or maybe we should start regulating everything? Make it illegal to lift with your back and not your knees, make a law about sitting too close to the television screen or reading in low light. How about a mandate on wearing your coat when it’s too cold outside; certainly we can ban gym shorts after November, right?

    Or maybe we should just ban diabetes, the common cold, and eventually death… It’s working for North Korea.

    So I guess you’re for legalizing all drugs?

    Are you considering sugar to be a drug?

    I suppose that is one pretty good example of why the logic of drug-banning is takes us down such dangerous paths.

    There is some debate over the addictive/psychoactive properties of sugar, but if you believe that government should intervene in extreme situations where something is causing serious harm to society, then one can make a similar argument about the over-consumption of sugar.

    Please show me the article in the constitution that addresses this.

    Black Prince (View Comment):
    I’m between two minds on this one. This tax seems to be very heavy handed, but there is an obesity/diabetes/fatty-liver disease epidemic in America and the over consumption of sugar is probably a major driver, if not the outright cause. The incidence of obesity and diabetes is so high it is absurd. Maybe this tax isn’t the most effective way of dealing with this problem, but something has to be done.

    Do you smoke? Drink alcohol? Eat red meat? Enjoy fatty foods? Engage in any risky activities?  I have a tax policy for you.

    • #52
  23. Kozak Member
    Kozak
    @Kozak

    Black Prince (View Comment):

    Eustace C. Scrubb (View Comment):
    And like the rise in the minimum wage, it is a law that will hurt the poor and not the rich. Typical for most progressive policy.

    In America, the incidence of obesity and diabetes is higher in the poor than in the rich…and the poor are least able to afford the associated costs.

    Well, remove all prepared and processed foods and sugary beverages and ability to buy fast food  from EBT cards for a start.

    • #53
  24. Randy Webster Member
    Randy Webster
    @RandyWebster

    Mike LaChance (View Comment):
    Which part of basic economics do liberals just not get?

    Pretty much any.

    • #54
  25. Seawriter Contributor
    Seawriter
    @Seawriter

    Don’t worry. A year from now they will insist it worked.

    Seawriter

    • #55
  26. Kate Braestrup Member
    Kate Braestrup
    @GrannyDude

    Valiuth (View Comment):
    In Chicago they also passed a sugar tax. It also made everyone angry, failed to raise the projected revenue and within a few months of it being passed was unpassed (as we literate like to say) because of public pressure.

    I was in Chicago a few years ago, speaking at a very liberal church “thing” (as I recall, having to do with Womyn) and had a side gig teaching death notification at a hospital outside the city. My host very kindly drove me to the hospital. Noting that her gas tank was low, she said she’d wait to address the issue until we were beyond the city limits, since the gas wasn’t taxed as highly.

    “But aren’t we tax-and-spend liberals?” I said. “Don’t we approve of taxing fossil fuels?” To her credit, she thought this was funny (and she still bought the gas out in the suburbs).

    This sort of thing happens all the time. Liberals insist that “we” have to do something, a law or tax or program is put in place, and those with means (and without any sense of irony or shame) cheerfully circumvent it. My own relatives —T & S liberals all— came up with an elaborate plan involving making my grandmother’s house into some sort of corporation in which we all owned shares, so as to avoid paying the estate tax when the time came. Astonishingly, the IRS did not fall for it! Go figure.

    The problem I see with what I call normal progressives/liberals (as opposed to the fanatical activist type) isn’t that they’re wrong about the problem. We do drink too many sodas. We are too fat. (I certainly am—just had to buy new pants yesterday…arrrgh!) It isn’t healthy.

    The problem is the belief that the government can “fix” complex, multi-dimensional human behaviors.  Even those who are in wholehearted agreement with a government behavior-modification  program will nevertheless cheerfully thwart and undermine it themselves.

     

    • #56
  27. Ralphie Inactive
    Ralphie
    @Ralphie

    Henry Hazlitts’ “Economics in One Lesson” is probably in short supply in progressive circles.  Or as Thomas Sowell asks “then what?.”  Their idea that life is lineal and the variables limited stunt liberals preception of how the real world works.  One varible effects another and another, like a large predator/prey model. Some variables are not known at the time the experiment is implemented.  In a free society, it still happens, but on smaller localized scales.   How’s Obamacare working out?, or their predictions for the trillion dollar stimulus?

    You raise tax on soda in your area, and people stock up out of town. Same thing happened with cig taxes.  Then you pass laws making the product bought out of town contraband, and you turn people into criminals.   People who smoke are depicted as losers. It’s all superfical and temporal; in the long run we are all dead.

    As a conservative Christian, I do not believe that abusing your body is a good thing, but I know that something somewhere will get you.

    You can pass all those good intended laws, and people remain mortal.

    I’m all for getting rid of social services, and this is really petty nonsense.

    • #57
  28. Doctor Robert Member
    Doctor Robert
    @DoctorRobert

    Black Prince (View Comment):

    rico (View Comment):

    Black Prince (View Comment):
    I’m between two minds on this one. This tax seems to be very heavy handed, but there is a obesity/diabetes/fatty-liver disease epidemic in America and the over consumption of sugar is a major contributing factor, if not the outright cause. The incidence of obesity and diabetes is ridiculously high in this county and something has to be done.

    Couldn’t agree more. Given the clear-cut health impact of Americans’ overconsumption of sugar and high-fructose corn syrup, soft drinks seem highly tax-worthy to me. As much as I hate agreeing with Seattle progressives, I think this tax has merit.

    I hate agreeing with progressives too, but I take some comfort in knowing that even a broken clock is right twice a day. To be honest, I think that the over-consumption of sugar is doing more harm to our country than illegal drugs.

    No, not a good idea to tax food for noble goals. The current obesity and type 2 diabetes epidemic is itself the result of government meddling.

    • #58
  29. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    Where will all the new revenue go? Seattle officials expect a $15 million boost in the first year. Since this was sold as a health initiative, $2 million of that will expand a city program that gives fruit and vegetable vouchers to low-income families. Of course, only $400,000 will go to actual vouchers; the other $1.6 million stays with the government for “administrative costs.”

    And, although it’s been said, many times, many ways, this is why I (generally) hate government.

    • #59
  30. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    rico (View Comment):

    Hammer, The (View Comment):

    rico (View Comment):

    Hammer, The (View Comment):
    If you don’t want diabetes, eat more responsibly.

    The damage to health is much broader than merely diabetes. Off the top of my head I’d point to heart disease and Alzheimer’s Disease as two areas of concern.

    Yes, and if we’re talking about health, we should consider exercise as an even more important factor. Perhaps we should ban all television-watching after 5:00pm in order to encourage people to get out and exercise?

    I don’t have any problem with identifying the causes of harm, or even with those who have the urge to preach against those causes loudly (and less loudly when they’re shown to be wrong, but by then they’ve moved on to something else). It does not follow, however, that the government needs to get involved and force people to do things that someone in the government decides are good.

    Or – maybe it’s a quality of life issue. Let’s say that a person enjoys sugary soda so much that he considers diabetes to be a good trade-off? Isn’t that the sort of decision that people make every day? What right do I have – or does anyone have – to step in and say that people may no longer make those decisions for themselves? What if, for instance, I believe that life is not worth living if you do not believe in God – that your short existence would be meaningless without a solid faith? Should we make laws that you must join my religion in order to improve your quality of life? Surely your eternal soul is more important than the risk of diabetes, right?

    Quite a bit of hyperbole to wade through, so I’ll set it aside for now.

    This is simply a tax. The tax amounts to about 21¢ per can. Nobody is banning anything. People can still drink as much of their favorite sugary drink as they wish. The logic of this tax strikes me as similar to that of taxing alcohol or cigarettes. It may help reduce consumption on the margin, and that is a good thing.

    No, it’s not.

    There’s a reason why federal, state, and local governments like to tax things whose demand elasticity is less than one – politicians and bureaucracies know they can rely on those revenues.  They don’t call them “sin” taxes for nothing.

    So, on the one hand, you’ll have politicians preaching about how these things are bad for us (pick one – nicotine, sugar, danishes), but they don’t ban them.  No, no, they’re horrible, destructive, expensive things, but we can’t ban them.

    But we can make a buck on them, and still feel super-preachy moral about telling us what jerks we are for consuming these things a bunch of chunky losers in gov’t tell us is bad for us while they get reimbursed for their fettucini alfredo at lunch with tax dollars paid for by people who work for a living.

    Yeah.  It’s a killer idea, duders.

    • #60
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