Tuesday, August 4, 2020
Aug. 4, 2020

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Sweetened-beverage sales in Seattle dropped 30% after soda tax, new study says

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SEATTLE — Sales of sugar-sweetened beverages at stores in Seattle dropped about 30.5% in the months after the city adopted a tax on such beverages, says a new study that also looked at sales at stores in Portland, which has no such tax.

Sales in Portland declined only 10.5%, suggesting sales in Seattle dropped much more than they would have without a tax, according to the peer-reviewed study by University of Illinois at Chicago researchers.

The study’s results are the first to measure the impact of Seattle’s tax on beverage sales in the city, and they may bolster claims by supporters that the controversial policy is working as intended.

“From a public health perspective, this is good,” said Jay Krieger, a University of Washington professor who heads the nonprofit Healthy Food America. “People are purchasing less sugary drinks, and we know that sugary drinks are associated with heart disease, diabetes, high blood pressure and strokes.”

Seattle’s tax of 1.75 cents per fluid ounce, which took effect on Jan. 1, 2018, is charged to distributors of sugar-sweetened beverages. Distributors can pass the tax on to stores, and stores to consumers. Proponents said the tax would reduce soda sales and raise money for health and education programs.

Many store owners and consumers opposed the concept, as did unionized beverage-industry workers and critics who described the tax as regressive, saying poor people would be hit hardest by higher prices. Lisa Herbold was the only Seattle City Council member to vote against the tax in 2017.

The health and education programs funded by Seattle’s tax, such as the Fresh Bucks program that helps people buy fruits and vegetables, are aimed at people with low incomes, noted Krieger, a supporter of the tax.

Washington voters in 2018 approved a statewide ballot measure, backed by the soda industry, that banned soda taxes in cities outside Seattle.

Seattle’s tax raised about $22 million in 2018, about $7 million more than city officials had predicted. That raised questions about whether the tax was actually reducing consumption. The officials described their initial estimate as conservative, saying they hadn’t wanted to promise too much revenue.

The UIC researchers compared sales from February through September 2018 to sales during the same period in 2016 and 2017. They used Nielsen retail-scanner data from supermarkets, convenience stores, drug stores, mass merchandise stores and dollar stores, and the data included an estimated 45% of all store sales. The study didn’t include data from restaurants, cafeterias and vending machines.

There’s no sign the tax has continued to drive down sales. It was expected to raise $24 million in 2019. That makes sense, Krieger said. In other cities with soda taxes, such as Philadelphia, sales have dropped and then stabilized.

The researchers looked at sales within two miles of Seattle and Portland to account for people who may have bought soda just outside Seattle in order to avoid the tax. Sales dropped slightly in the border areas around both cities.

The price of taxed beverages in Seattle rose by about 1 cent, relative to the price in Portland, meaning most of the tax was being passed on to consumers. An earlier study by University of Washington researchers suggested a larger price increase, with consumers paying nearly 100%.

In Seattle, sales of family-sized beverages dropped more than sales of individual-sized beverages, and sales of soda dropped more than sales of other taxed beverages, such as energy drinks. Sales of untaxed beverages in Seattle dropped very slightly, less than in Portland.

The study says that in the first year of Seattle’s tax, “there was partial pass-through to the prices of taxed beverages, a substantial reduction in the volume sold of taxed beverages, no evidence of cross-border shopping and moderate substitution to untaxed beverages.”

The study, published last month in the journal Economics and Human Biology, was supported by grants from Bloomberg Philanthropies and Arnold Ventures Philanthropy. Former New York City Mayor Michael Bloomberg, a candidate for the Democratic Party’s 2020 presidential nomination, has long advocated for soda taxes. Bloomberg and Arnold Ventures had no actual role in the research, according to the study.

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