In the News

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  • KPIX - October 21, 2016

    New Industry Study Shows Soda Tax May Not Raise Price Of Soda

    A new, industry-funded study on Berkeley’s soda tax says it may be having unintended consequences.

    As a local grocer and small business owner, I have felt some of this growth, and I’m excited about what lies ahead.

    This comes just as three Bay Area cities have their own soda tax proposals on the November ballot.  

    The new study, albeit paid for by the soda industry, shows that the tax may not raise the cost of soda, but could be spread to other grocery items.

    Supporters say a soda tax is needed to protect kids’ health. They point to Berkeley, which has a soda tax as proof it works. But does it?

    Brad Williams, a former chief economist for the California Legislative Analyst’s Office now works at Capitol Matrix Consulting and he said, “What we found is that, to a surprising extent, the tax is getting spread around in Berkeley.”

    An anti-soda tax group hired Williams to look at the numbers.

    “If you don’t have a major increase in price on sugar sweetened beverages you’re not going to get a significant effect on consumption so you’re not going to get the health benefits that the proponents would like to see,” Williams said.

    Critics of soda taxes say it’s really a grocery tax because nothing forces stores to raise the price of soda. Grocers can recoup the tax however they like, charging more for other items..

    Critics of soda taxes say it’s really a grocery tax because nothing forces stores to raise the price of soda. Grocers can recoup the tax however they like, charging more for other items.

    Critics of soda taxes say it’s really a grocery tax because nothing forces stores to raise the price of soda. Grocers can recoup the tax however they like, charging more for other items..

    According to the study, the cost of soda in Berkeley isn’t much different than in other cities.

    The study looked at prices of Coke, Pepsi and Dr. Pepper at CVS, Walgreen’s, Safeway and 7-11s in Berkeley and compared that with prices in Oakland, Emeryville, Richmond, Albany and El Cerrito..

    A standard 12-pack of soda was 20 cents higher in Berkeley. A 2 liter bottle was 16 cents more expensive.

      And a 20 ounce bottle was only a penny more.  

    These show an average of 15 percent of the tax being passed through to soda.  

    Lauria Capitelli is a Berkeley City Council member who is also running for mayor and he’s aware that not all grocers are raising the price of soda in Berkeley.  

    When asked whether grocers have been passing along the tax?  

    Capitelli responded, “Some have and some haven’t it’s a toss up right now.”  

    If grocers are spreading this around does that undercut the purpose of the tax?  

    “I don’t think so actually because I think there are two components of the taxes…one is to discourage consumption based on price the other is to discourage consumption based on education and education is working,” Capitelli said.  

    Miller does not agree.  

    Miller said, “The bottom line is, the purpose of this tax is to change behavior, because the tax is going to be spread across a wide variety of groceries, there’s not going to be a big change in behavior.”  

    The industry-funded study found that the price of soda doesn’t necessarily change after the soda tax is passed.  

    Capitelli said he knows some grocers in Berkeley haven’t decided to raise the cost of soda at their stores.  

    The taxes that are collected go into the general fund in Berkeley so that money could be used for any government purpose.  

    But Capitelli said his constituents will hold his feet to the fire and make sure that money is used for health-related purposes.

  • Post News Group - August 5, 2016

    Op-Ed: Sack the Oakland Grocery Tax

    Over the past few years, the people of Oakland have witnessed a total resurgence of our city. Our community has experienced an amazing business and economic revitalization.

    As a local grocer and small business owner, I have felt some of this growth, and I’m excited about what lies ahead.

    That’s why I was dismayed when I recently learned that our local elected officials decided to place a new grocery tax on the November ballot that will disproportionately hurt my food market and the low-income families and individuals that are my customers.

    Those advocating for this tax are trying to convince the public that it is a direct tax on soda or other sweetened drinks.

    What they aren’t telling you is that the tax will actually be imposed on food distributors like myself who sell these types of drinks – not on the drinks themselves.

    They promote the tax as a one-cent-per-ounce fee on all sugar-sweetened drinks, but consumers aren’t ultimately responsible for paying the tax. Grocers like myself will have to do so – or we will be breaking the law.

    That means I will only have one option to recover those funds so I don’t lose employees or go out of business: raising prices on all the foods, beverages and other items I sell in my market.

    I have been lucky that my regular customers are dedicated to my grocery offerings and committed to supporting my neighborhood business, but other local grocers might not be so fortunate.

    It also doesn’t make sense to institute policies that will raise grocery prices for those who can least afford it — the hardworking people and families of Oakland already struggling to afford living, working and raising their families here.

    While the economic growth we’ve seen has affected some of us positively, there are still far too many residents struggling to deal with the high price of rent and the increasingly expensive way of life in the Bay Area.

    That’s why the last thing we need in Oakland right now is a grocery tax.

    Perhaps there are valid reasons why our city leaders believe that this is the right approach. But making groceries more expensive, forcing local grocers to pay new fees and imposing policies that will make life more difficult for all of us here in Oakland are not the right answers.

    It is already challenging for Oakland residents to find fruits and vegetables in our community.

    So this November, don’t be fooled by the language and rhetoric the “soda tax” advocates use to describe this measure. The stakes are too high for Oakland residents, grocers and small businesses. Make sure to vote no on the Oakland grocery tax.

  • USA Today - August 1, 2016

    Soda taxes fall flat: Our view

    Better-informed consumers, not surcharges, can help prevent obesity.

    The latest attack on America’s expanding waistlines is aimed at your wallet, as health advocates and lawmakers hope to tax consumers out of drinking so many sugary drinks.

    In Philadelphia, which hosted last week's Democratic convention, a tax of 1.5 cents per ounce on sugary drinks, and even on artificially sweetened diet drinks, will go into effect in January — making it the first major city with a soda tax. Voter initiatives for similar taxes will be on the November ballot in Oakland, San Francisco and Albany, Calif., and likely in Boulder, Colo. A similar measure passed in Berkeley, Calif., in 2014.

    Americans, more than one-third of whom are obese, would be better off if they did cut back on sugary drinks. But efforts to tax people out of the habit are likely to fall flatter than day-old cola.

    People are quick to see through ideas described as good for them but which make little sense. Why slap a surtax on sodas but not on Twinkies (135 calories per cake) or McDonalds' Double Quarter Pounder with Cheese (780)?

    And why tax diet sodas, as Philadelphia does, if the target is sugar? Maybe because the tax is a money grab disguised as a public health initiative.

    Soda taxes are heavy on intrusion and light on impact. There are better ways to encourage people to eat and drink less. And while advocates like to draw an analogy between taxing soda and taxing cigarettes, the two products are vastly different.

    Cigarettes are highly addictive. If used as intended, they can kill you. Smoking is responsible for about 480,000 deaths a year. High taxes — $4.35 per pack in New York state — are aimed at preventing price-sensitive teens from getting addicted. And over the years, they've proven their worth.

    While some people certainly crave sugary sodas and other good-tasting but bad-for-you foods, people can and do choose to use them in moderation or to stop drinking them entirely.

    Most important, soda taxes haven’t been shown to work. Take Mexico, where the obesity problem rivals that of the United States and where per capita soda consumption is the highest in the world. In 2014, Mexico added a tax of about 10% to sugary drinks. Initially, soda consumption dropped by nearly 2%, but in 2015 it came roaring back, rising about 2.7% and hitting a new peak, according to Canadean, a research and consumer insight firm.

    More effective ways already are being used to change people’s diets. The best use of government authority is to empower people with the information they need to make healthier choices.

    New York City — later joined by Seattle, about 20 other jurisdictions and the state of California — was the first to require calorie counts on restaurant menus. And starting next May, under a federal law, chain restaurants across the country will have to come clean on the calories in their offerings. Sure, consumers know that sodas are high in calories, but perhaps not how high. When they realize that a 20-ounce Coke has 240 calories, they might re-think that drink.

    Already, per capita consumption of carbonated soft drinks has been dropping, in 2015 to its lowest level since 1985, while sales of bottled water are on the rise.

    As with smoking, obesity will decrease when overeating, sugary products and super-sizes become less culturally acceptable. The government's goal ought to be smarter consumers, not higher taxes.

  • Contra Costa Times - May 22, 2015

    Barnidge: If Berkeley shoppers don't have to pay the soda tax, does it really exist?

    When Berkeley officials summoned the media last week to bask in the success of the city's new 1-cent-per-ounce soda tax -- $116,000 collected in the first month -- Councilman Laurie Capitelli summed up the essence of the program with a touch of irony.

    "What we really want to do, in 10 years," he said, "is collect no (soda) tax."

    Translation: By dramatically increasing the costs at the register -- a $2 two-liter bottle of Coke would cost 68 cents more, or a 34 percent price hike -- the city hopes to sour shoppers on purchasing calorie-laden beverages that contribute to obesity and diabetes.

    That assumes, of course, that the tax is passed on to customers, who then turn their backs on sugar-sweetened drinks. That's not what's happening in Berkeley, from what I've seen.

    Proponents of this measure have sold artificial price hikes as a way of curbing bad nutritional choices. In fact, a UC San Francisco study in 2012 concluded that if a soda tax were implemented nationwide, "a penny-per-ounce tax on sweetened beverages would prevent nearly 100,000 cases of heart disease, 8,000 strokes and 26,000 deaths over the next decade."

    When I visited Berkeley last week to go soda shopping -- hey, it was a slow day -- I discovered that a CVS store on Shattuck Avenue sold a 1.5-liter bottle of Pepsi-Cola for the same price as a CVS in Concord, which has no soda tax. In both cases, the base price was 99 cents, the deposit 10 cents and sales tax 10 cents, for a total of $1.19.

    When I asked a clerk why the extra fee wasn't added to the cost, she looked at me as if I had a tattoo on my forehead.

    Farther down Shattuck Avenue, I repeated the experiment at a Safeway store. Same result: 99 cents for the soda, 10 cents deposit, 10 cents sales tax. A Concord Safeway charged exactly the same. How can a disincentive work, if customers don't have to pay it?

    Berkeley CVS store Manager Danny Rogers said his store is simply absorbing the added cost. "We're just taking on the tax and paying it," he said. "We're still looking into should-we, should-we-not (charge customers)."

    A woman who identified herself on the phone as the Berkeley Safeway store manager (she wouldn't give her name) sounded mystified by the question. "I'll have to look into that," she said.

    The city has no authority to force merchants to pass along the first-in-the-nation tax. The way the program is structured, distributors pay a fee based on the quantity of product delivered; that charge is passed on to stores, which figure out how to afford it.

    Maybe CVS increases the cost of sunscreen. Maybe Safeway charges more for sour cream. Just because it's called a soda tax doesn't mean that's where the revenues to pay it are coming from. Maybe it's really a sunscreen-sour cream tax.

    If Capitelli was surprised by my finding, he hid it well. He said he'd hoped that retailers would pass along the fee, raise prices and curb consumption, but that decision rested with each store. Maybe such a practice will yet evolve.

    "I hope that price discourages people from buying," he said, "but equally important is the opportunity to take the revenue we get from this and educate people as to the risk they're taking consuming sugar-sweetened beverages.

    "What you're looking at now is a snapshot. We have yet to really see full implementation. I'll be surprised if most retailers don't pass the cost on."

    In the meantime, if you're out of Pepsi, feel free to shop Berkeley stores: They're selling it at a good price.

  • Politifact - April 25, 2016

    Fact-checking Bernie Sanders’ claim that Jim Kenney’s soda tax is regressive

    Jim Kenney’s proposed soda tax went national last week.

    Hillary Clinton led off what became a back-and-forth political battle by voicing her support for the tax at a forum in Philadelphia. Bernie Sanders chimed in later to call the tax regressive.

    Kenney fired back in an editorial on Huffington Post that his proposal, which would levy a three cent per ounce tax on distributors, was a "corporate tax" and said Sanders was siding with beverage corporations. Then Sanders responded with an editorial of his own, in Philly Mag. He basically gave an elongated version of what he said earlier in the week, which was, "A tax on soda and juice drinks would disproportionately increase taxes on low-income families in Philadelphia."

    Is Sanders correct? Or was this political grandstanding?

    Berkeley, Calif., remains the lone American city to enact a sugary drink tax. It taxes the distributors of sodas and similar beverages like sports drinks 1 cent per ounce. Studies have shown some of the cost of tax has been passed on to consumers. A Cornell study found about 25 percent of it was passed on, and a University of California-Berkeley study found the amount to be between about 50 to 70 percent, depending on the type of beverage. The prices of soft drinks were more likely to go up at supermarkets than chain drug stores.

    Carl Davis, the research director at the Institute on Taxation and Economic Policy, told Billy Penn last month soda taxes like the one proposed by Philadelphia are "imperfect:" "The first thing you realize is that it is regressive. It’s going to hit lower and more moderate income families more heavily than higher-income families."

    William Shughart, a Utah State University professor and sin tax expert, explained taxes like the one proposed by Kenney disproportionately affect lower income residents because a greater amount of their income is used on food and drinks.

    Warren Gunnels, senior policy advisor for Sanders, said in an email, "It would make much more sense to finance universal pre-school in Philadelphia by raising taxes on its wealthiest residents, who currently benefit from flat state and city tax rates. Right now wealthy Philadelphians pay state income tax of 3.07 percent, an unemployment tax of 0.07 percent, and a city income tax of 3.92 percent. That’s a total state and local tax burden of 7.06 percent. By contrast, New York City’s wealthiest residents pay a top rate of 12.6 percent."

    Such a plan would be easier said than done, according to Kenney’s administration. "Because of the uniformity clause, it’s constitutionally impermissible right now in Pennsylvania to raise the income tax rate only for wealthy individuals," said Lauren Hitt, Kenney’s communications director. "The Republican controlled state legislature would have to change the constitution and we’re not holding our breath on that one. Our kids need Pre-K now."

    Kenney has said the tax is not regressive because he believes the money will stay in the neighborhoods. His finance director, Rob Dubow, said most consumers of sugary drinks are in poor neighborhoods. When Dubow suggested distributors would absorb some of the tax, City Council president Darrell Clarke responded, "Fundamentally, I don’t believe that."

    Our ruling

    Sanders said Kenney’s proposed soda tax would disproportionately increase taxes for low income families. In the only other instance of a soda tax in the United States, studies have shown somewhere between 25 and 70 percent of the cost of the tax gets passed to consumers. Tax experts say if this tax reaches the consumer level it would affect low income residents to a greater extent.

    We rule the claim True.